Forum Post: Who here believes that wealth is static?
Posted 12 years ago on Nov. 11, 2011, 10:23 a.m. EST by Febs
(824)
from Plymouth Meeting, PA
This content is user submitted and not an official statement
Is there one giant "pie" out there and if one person has a bigger slice it means there is less of that pie for others?
Is there the same amount of wealth out there every year and a rich person then takes it away from being available for another?
The elasticity of the economy is based on efficiency. The easier people can do business on all ends the more money there will be from top to bottom. Lighter regulation, more proactive oversight, more transparency and ease of use equals more money all the way around.
it is not static, and here is an example.
three people walk into a hotel and request a room. The manager charges them $30 for the room. They each pay $10 and head to their room. The manager, realizing they were overcharged, it should have been only $25, gives the bell-person $5 to return to the patrons. The bell-person, not knowing how to divide $5 three ways, pockets $2 and returns $3. So, each person only paid $9 each for the room.
$9 each times the 3 persons is $27, plus the $2 in the bell-persons pocket equals $29. So there is a missing $1.
See, not zero-sum
No dollars went missing the hotel has 25 the bellhop 2 and the patrons 3. This equals the 30 dollars they originally had.
You just blew my mind. Where is the extra $1?????
Somewhere in here
http://www.creditcontraction.com/images/affiliate/Great-Credit-Contraction-Liquidity-Pyramid-Large.jpg
The amount of dollars in the world is always changing. Its equal to the national debt. Every year there is deficit spending, it gets bigger. If there is a budget surplus it gets smaller. The tax policy in the US ensures that the majority of all money out there ends up in the hands of the most powerful.
How could wealth be static? The Federal Reserve prints money all the time. The problem is that all of that new "fake" money seems to disproportionately go to a very few people. Wealth is not static and neither is the ratio between those with it and those without. The problem lies in the fact that the wealth gap ratio has steadily increased in favor of the few, which is not sustainable.
Well currency isn't wealth and the wealth represented by the currency is actually static as printing more currency just devalues all the rest of the currency to the point where the same amount of wealth is represented by the new total.
It is not static.
I can go to the bank and borrow $100,000
I can use that money to build a house. I am exchanging the money for the labor of the workers and the material to build the house.The workers are happy because they are earning money, along with the businesses I buy the material from. They want the dollar more than the material, I want the material more than the money. We both get what we want through a mutual exchange.
Once the house is build, I can sell it for $150k. The buyer is happy because they are getting a new home that they could not or would not have built themselves. I am happy because I have the money to pay back the bank. The bank is happy because they earned money on the interest they charged me.
Everyone earned money and there is now $50k more in the economy.
hey brainiac, what about if you sell your new-built house (with a total cost of 100,000 dollars) for 20,000 dollars because the market is not interested in values above that... That would be more realistic with the devaluation of US house market since the subprime crisis. In that scenario, not only you "don't make more +50K to the economy" but the economy Looses a total of -80,000 dollars of money.
The problem with the house market is simple: houses were overvalued, over-priced and everybody knew that. Sellers kept selling as a common practice. But when hard facts hit and the buyer says "what the heck, for that price I could make 3 houses of my own!", then it's simple: you lower your selling prices to get a buyer or you can be sure your mortage agency will be bankrupt by the end of the month.
The solution for the price problem is simple: regulation, limits, securities and good information sources. The difficult thing is how far you want to regulate. But be assured, facts say it was total absence of regulation of house market prices that made the economy crash. You buy 20,000 shares of Lehman Brothers because you believe the company has lots of houses, estates worth a fortune ready-to-sell only to find out watching superball on sunday that most of the company assets are super-overvalued, like 10 times. You still think you can sell it on the market because you think the market eats everything it's given. But people don't want to buy, because share values have gone to another dimension than real economy ... That's it! you find out you just bought 20,000 toxic shares. Eventually you will become desperate to get rid of them, and will sell them at ridiculous price because otherwise you won't get a dime back. If agencies were subject to imparcial control by regulatory agencies, you would always know that when you buy a share, the share value matches with the real thing in the economy or at least, you would feel safe that you're not talking of 2 different worlds (stock shares and real economy)
I disagree with your facts. "be assured, facts say it was total absence of regulation of house market prices that made the economy crash."
It believe it started with Clinton and ACORN. Dont get me wrong, the Republicans are in there as well with deregulating the housing market.
Remember Clinton talking about how everyone should own a home. Owning a home makes people better citizens, homeowners do not steal from their neighbor, makes them responsible, etc, etc. ACORN bringing lawsuits against mortgage companies for "predator lending tactics". The legal action against mortgage companies that would not lend in RED districts. Government mandated loans through fanny mae and freddie mack.
The banks could not charge a higher interest rate on those that had poor credit, and fanny freddie were doing paper loans, so anyone that could breath was getting a home loan. The problem was, they could not afford them in the first place, and if they got into an APM they definitely could not afford them when the interest rate changes. They were loaning out on SUB-PRIME loans. Loans that were high risk, because everyone should be a home owner.
hey brainiac
I just realized how my username must sound. LOL. I meant to be BrianC, because I am not about to use my real name or real city on here. You just never know. And it came out as BrainC, or even brainiac. LOL Maybe it was a Freudian slip. You gotta laugh, that is humorous.
This is the difference between the poor mentality, the middle class mentality and the wealthy mentality.
the poor mentality sees things as road blocks to success. I would if I could, but I cant because...
The middle class mentality is get a good education, get a good job and work hard. Eventually, you will be rewarded with wealth. As OWS so clearly knows, this is not true. You can work hard and still be destitute.
the rich. Use money and leverage to make more money.
Take the difference between middle class and wealthy. The middle class mentality says get a good job. Okay, so you raise up to upper management, or even branch manager. How many jobs can you hold at once? One, one paycheck. The wealthy says, own the business and hire that branch manager. How many businesses can you own? Several, several paychecks.
Yes, and there in lies the risk. Being an informed builder/investor is key.
Yet this is an example of added value. I can do the same thing with snickers. I can go buy a box of snickers of 30 for $20. The store I bought them from is happy because they would rather have the money than the snickers. I sell each of my snickers for a $1, earning $30 or $10 profit. Each person I sold to only wanted one snickers and did not want to deal with a whole box of snickers, so they are happy to pay a little more for only one. I would rather have the $1 than the snickers, so again, win-win. I take the risk that the snickers will sell before they go bad. I take the risk that the snickers market does not tank while I am holding.
And on the one below, renting, I buy and rent when the market is low like it is. More people selling and more people renting. I sell when the market is back up. Prices go up and more people are buying.
Now fabianmockian below, thinks that is scummy business practice. I am curious as to what they do for a living? Living at home, still in college? I bet if they currently rent, they feel that their landlord is robbing them blind with the high rents they charge.
Do it
The question is, what is stopping you from being able to do it?
doing it. Actually, I prefer to buy foreclosed homes and rent them out. Still win-win.
I am getting a low valued assets off of the banks records, or buying it from a family that can no longer afford it. Workers go in and fix it up, and earn money while doing it. I rent it out for higher than my mortgage. I am providing a clean, well kept house to a family that cannot or will not own a home of their own. So the tenant is happy. The bank is happy because I pay my mortgage on time. I am happy because I earn money on my risk.
This is the idea of using money to make money. I leverage the money I borrow from the bank to put money in my pocket.
Well, what would you do if the value of these foreclosed properties that you own dropped significantly and no one wanted to buy it from you and your renters lost their jobs. This is what happened to so many people and don't believe it could never happen to you. I don't have a problem with you taking a risk and reaping the rewards, but what if the risk you thought you were taking was actually ten times worse than you were told or you thought. What if the bank had a clause that said they could call in your loan immediately or what if they stacked the deck so the value of your properties plummeted? I don't blame you for being on the side of the 1%, it sounds like your life is perfect, but you might want to be a little more compassionate.
The actual value of the house means nothing right now. It doesn't until I go to sell it. the important thing is how much can I rent it for. And if my renter loses their job, I find another renter. I take the risk of not being able to rent it to cover the mortgage. Any good mortgage company will check your contract with the bank.
Who should I be more compassionate towards? Those that have been foreclosed on and no longer have a home? I am, I rent to them.
How are you showing compassion? and to whom?
And your renters pay you what they should be paying in mortgage. You're sounding kind of scummy there Bri bri. I don't think we need any further contact. C you later
as I said, cannot or will not take a mortgage of their own. I force NO ONE to rent from me. However, I do provide the best value for the best price in the communities I rent in. That is how I am able to keep a tenant.
So you suggest that there be no profit on goods or services?
Have you not heard of added value? I take care of the house, the mortgage, the insurance. If the house burns down, who deals with the insurance company? If the house floods, who?
See, this is the zero-sum mentality that liberals seem to have. I am STEALING money from my tenants because I charge more than the mortgage. So you then come to to conclusion that is is okay for the gov't to STEAL my money through taxes. tit for tat, right?
And if I said, oh, okay, let me only charge them the mortgage price, then I lose money while I am between tenants. And if I have a couple of houses vacant, I go bankrupt. And then all of my houses go into foreclosure. Then ALL of the tenants are kicked out. It is not a substantial business model.
Charity is great, but it is not a business.
That question can only be answered when we know what the true wealth of our planet is.
This statement takes as a given that wealth is static.
hmm i don't think i said that. But if you mean we'd have to take replenishment rate of resources into account. Sure i agree.
you are pre-occupied with nonsense. how is this going to get you a job?
I don't need to get a job. Job would mean i have to work for someone else. But i work for myself. So no job needed. ty for caring though.
great ! self employed - excellent
The federal government taxes income, not wealth. Think about it.
Not what I am asking.
The wealth of a few is based on the poverty of many.
The only place that is true is in the Tax system.
Please explain.
When I give money to someone else to purchase something I am getting what I consider valuable to me in return, and I am doing so of my own free will.
My tax dollars go to support many things that I never get value return on, and it is taken from me against my will and distributed to people who become wealthy on that money.
What you say of the tax system is also true in the corporate system. Many of our purchases are of necessity, and only available from corporate sources that have used profits to buy politicians and enact laws that favor them over us, eliminate competition, outsource labor, destroy the environment, etc.
Conversely, some tax dollars go back to society in a positive manner to protect people and the environment that is necessary for our continued existence. But the concentration of wealth, exercised thorough corporate financial power, has compromised the ability of government to fulfill its responsibility to citizens.
Corporations are no more paragons of responsibility than the politicians they own and who act solely on their behalf.
Government has clearly failed. But eliminating it will not solve the problem. In a democratic society, power must be vested with all people, not just those who can afford to buy it.
Thus the necessity of recognizing the true nature and power of the corporate financial complex that collapsed the US economy and is in the process of collapsing the world economy (Greece, Itlay, Spain, Ireland, etc.)
Can you support that claim?
Can you refute it?
Yes since you must believe wealth is static for this to happen. I can also prove it through any given market example.
Which would you like?
Oh and those who bring a claim have the burden of proof. Just for future reference.
PROOF: Statistics regarding distribution of wealth over time. As wealth becomes more concentrated, fewer people have it. It's not rocket science.
Sorry that isn't proof. Its correlation.
Proof that wealth is not static however is easy.
In AD 400 there were many fewer people living on the planet and thus an average distribution of wealth would show each person living more wealthy than today when there are several thousand times the amount of people. If wealth were static this would mean each person has roughly 1/1000th the wealth of a person living in 400 AD. Since our standard of living is actually much higher than a person back then wealth cannot be static.
Your position that each person has a proportional lower share of the existing wealth only makes my proof stronger for it means we should have less than the 1/1000th share that would be due to only population expansion.
Would you like the other proof of any given market interaction which also shows that wealth is not static?
The wealth of a few is based on the poverty of many.
"Static wealth" is an inane concept, and has nothing to do with the statement above, which you cannot refute. The statement is true whether wealth is static or not.
Want to buy some credit default swaps? Great leverage ... and the government will use taxpayer money to bail you out when they blow up.
You're making a universal declaration which is not universal. The many can be wealthy.
False. If everyone is rich, who is going to clean up after them?
If everyone is rich nobody will perceive each other as rich. We could all live lifestyles of millionaires today but we would all see each other as average. A poor or middle class person in some nations could look at working poor in the US as living a rich lifestyle.
The footprint of the rich is so large that a small fraction of the population consumes the vast majority of the Earth's resources. For everybody to be "rich", the population would have to be reduced dramatically, or other 25 equivalent planets would have to be available to provide the necessary resources.
The lifestyle of a millionaire is a lifestyle of excessive consumption that ignores the basic realities of finite (static) resources.
Not really. Rich is only a measure of income. Take Warren Buffet for example he is very rich but lives in a modest home and drives a modest car. Rich does not mean high consumption.
wealth is not static - but if I have a dollar in my pocket - your GREED may steal it
If I do not use either force or fraud how would I steal it?
ask the kochs - tax code
30 years of redistributing wealth TO THE RICH
Well the tax code is force. But I am talking about me, my personal actions without fraud or force. How would I steal it if I used neither of those.
This is the difference in mentality. You see it as an agreeable exchange of resources. A win-win situation. I want that snickers more than the dollar and the store wants my dollar more than the snickers.
You are arguing with someone that sees it as a win-lose situation with a zero-sum mentality. For someone to get a dollar, someone else has to lose a dollar.
This is why taking money in the from of taxes and by force is acceptable. This is why the idea of taking money from the wealthy is acceptable. Because for someone to be rich, they must have taken it from someone else to begin with.
I believe it comes from a poor or lower middle class mentality. They do not understand how to make money earn more money, so they struggle with money all the time. They saw their parents struggle with money. they saw their parents work their entire life only to be lower middle class at best. Or if they did become rich, they feel guilty because of it.
Oh yes I agree. Most people who believe in using force to distribute wealth believe in the insanely simplistic idea that wealth is static.
tax it out of your pocket
if you have 1 dollar that changes hands 500 times in a year, you have a annual economy of 500 dollars, based on only one dollar.
In the end there is still only one dollar.
Anyone in America can become rich. The country is suffused with success stories of people who made it from nothing. Only the lazy, the envious, and the angry liberals don't understand this.
You don't have to be educated or have wealth to start your own business and make it. If you choose to be an employee at a low paying job, though, you are condemned to ekeing out a living.e
not static
[Removed]
Zero
Sum
Entirely not a zero sum game.
If I have 75 cents and you has a pack of gum and I buy it we are both more wealthy.
You valued the 75 cents more than the pack of gum so you are better off, I valued the gum more than the 75 cents so I am better off. If we did not both believe we would be better off we would not have traded.
Wealth has grown.
jumps up and down YES! YES!
I use snickers as an example instead of gum.
Ergo
Sum
The amount of wealth changes every second. Every time a new resource is harvested, there is more wealth. If 100 tomatoes are divided between 10 people like so: 5, 5, 5, 5, 5, 5, 5, 5, 5, 55, it is possible for the people with 5 tomatoes to grow more tomatoes if they want to reach 55 tomatoes. They don't necessarily have to share the tomatoes to reach equal wealth.
But, this is does not address the current economic problem. The problem is that the economic structure makes it so that much more of the new wealth flows towards the top of the pyramid once it is created. It's not about distributing the current wealth, but about changing the system so that its structure serves as a wealth funnel that distributes future wealth as evenly as possible.