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#326683 - 06/18/20 01:32 AM Re: What is wealth? How is it made? How is it accounted? [Re: CPWILL]
logtroll Offline
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Registered: 04/26/10
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Originally Posted By: CPWILL
Originally Posted By: logtroll
Recent comments here combined with a book I'm reading called "The Overstory" by Richard Powers, got me to thinking about wealth. I just got started with the thinking, so I'm not ready to present any opinions.

Anybody who is, go for it!

This is a good question and, as several posters have noted, how you answer depends on your definitions.

I will distinguish between "wealth", which I will define roughly as economic resources, and "living a rich life", which includes a material baseline, sure, but also includes things like friends, family, purpose, and contentment.

Living a Rich Life, I believe, probably requires a number of inputs. One has to find joy (which isn't happiness, but they overlap) in your personal associations, joy in achieving a purpose, and a degree of earned success.

Wealth can be part of living a rich life. It establishes the baseline, and is often the marker of earned success. Economic resources, which form the basis of "wealth" are increased when current resources are shifted into more productive uses.

Two comments:

1) Defining one sort of wealth as economic resources is a useful tool, but that is a very narrow thing relating only to individuals, and not to the system context. If an individual's economic wealth comes at a cost to the system, then it is not new wealth created. It is a logical fallacy to claim that wealth in the system increases simply because an individual has gained economically.

2) Natural resources do indeed serve as a basis for wealth, but once again, if those resources are acquired without accounting for the costs connected with their acquisition, then it is a fantasy. As our friend Greger has pointed out, climate change is an awfully serious entry on the debit side of system wealth accounting. It is clear why free market Capitalists are generally climate crisis deniers - because it negates all the wealth that some individuals have acquired while externalizing the full cost and burdening all humans, and other living beings with dealing with it (that would be a form of socialism, in my opinion).

A huge part of our economy is related to the manipulation of 'economic resources', which I do not see as creating any wealth, it just redistributes the financial wealth around, usually in a way that causes it to concentrate with the people who have the most money.

The idea of Capitalism supporting more people than ever before in history is one that needs a lot of attention. At any given time, the amount of financial wealth on the planet is finite - adding more people without creating more wealth is simply diluting the capital accounts of the shareholders - creating more money through debt results in inflation, which is one expression of share dilution. To truly and sustainably make us all more financially wealthy, as you aver, the creation of real wealth must grow to keep pace. I have a suspicion that all real wealth originates from natural resources, which means that on the face of it, more natural resources need to be consumed to support growth. The exploitation of abundant natural resources is probably the real reason behind your assumption of a wealthy global population and not Capitalism, but there is ample evidence that externalized costs abound, and the natural resources gravy train is tipping into the abyss. You know the huge national/global financial debt? That is a reflection of our natural resources debt. We are not sustainably wealthy, we are in deep shiit triple-bottom-line debt, living on advances on the global credit card.


Edited by logtroll (06/18/20 12:54 PM)
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#326684 - 06/18/20 01:48 AM Re: What is wealth? How is it made? How is it accounted? [Re: logtroll]
logtroll Offline
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Triple bottom line economics... people, planet, profit.

Social, environmental, and economic wealth.

Capitalism plays a role only in the third leg of the wealth stool, while externalizing its costs onto the other two legs.


Edited by logtroll (06/18/20 12:02 PM)
Edit Reason: More words...
_________________________
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To change something, build a new model that makes the old model obsolete.”
– R. Buckminster Fuller

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#326699 - 06/18/20 06:55 PM Re: What is wealth? How is it made? How is it accounted? [Re: logtroll]
Hamish Howl Offline
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Registered: 11/21/19
Posts: 608
Loc: Tucson, AZ
The only accurate measures of wealth are the following:

1. What is your sustainable standard of living, and

2. What rules can you break?
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#326782 - 06/20/20 07:56 PM Re: What is wealth? How is it made? How is it accounted? [Re: logtroll]
CPWILL Offline
newbie

Registered: 12/26/19
Posts: 481
Originally Posted By: logtroll
Two comments:

1) Defining one sort of wealth as economic resources is a useful tool, but that is a very narrow thing relating only to individuals, and not to the system context. If an individual's economic wealth comes at a cost to the system, then it is not new wealth created. It is a logical fallacy to claim that wealth in the system increases simply because an individual has gained economically.


Concur. There is, after all, such a thing as theft. In our system of economic exchange, however, we gain individual wealth generally to the extent to which we serve each other; a much better means of bending man's natural self-regard towards the service of others than coercion, and one that is exponentially more effective to boot.

Quote:
2) Natural resources do indeed serve as a basis for wealth, but once again, if those resources are acquired without accounting for the costs connected with their acquisition, then it is a fantasy.


Natural resources can serve as a basis for wealth. At some point I suppose you could argue that all physical resources become "natural" because they exist and are made, but, assuming you mean a sort of first-stage (ie: land. metals dug from the earth. water. etc.) natural resource, then, yes, they can serve as a basis for wealth, but are hardly the only basis out there.

Quote:
As our friend Greger has pointed out, climate change is an awfully serious entry on the debit side of system wealth accounting. It is clear why free market Capitalists are generally climate crisis deniers - because it negates all the wealth that some individuals have acquired while externalizing the full cost and burdening all humans, and other living beings with dealing with it (that would be a form of socialism, in my opinion).


Socialism is state control (directly or indirectly) of the means of production.

I continue to be unsurprised but disappointed at those who worry about climate change (or global warming. or global cooling. or ozones disappearing. or forests burning. or ocean acidification. etc.) being anti-capitalism, when Capitalism is the system of economic organization that is most congruent with the ability to minimize exploitation of natural resources (due to increased efficiency) and the only system (yet discovered) which produces enough wealth for us to prioritize more refined public goods such as environmental concerns.

Anyone who thinks Socialism will protect the environment is welcome to go walk around and breathe in Beijing, or

Quote:
A huge part of our economy is related to the manipulation of 'economic resources', which I do not see as creating any wealth, it just redistributes the financial wealth around, usually in a way that causes it to concentrate with the people who have the most money.


If I can take the same plot of land that fed 1 family, and "manipulate" it through technology to feed 10 families, that is indeed increasing the wealth available to us. Alternately, if I can take the human labor that used to be needed just to feed us and put it to more productive uses because I've come up with better ways to farm the same land (such as, for example, tractors), then I'm also increasing our societal wealth.

Quote:
The idea of Capitalism supporting more people than ever before in history is one that needs a lot of attention. At any given time, the amount of financial wealth on the planet is finite


Sure, just as, at any given instant in time, the number of human beings on the planet is fixed.

The question is not whether we are:

Quote:
adding more people without creating more wealth


But rather whether or not the rate of increase in our ability to produce is equal to or greater than the increase in our numbers. So far, under capitalism's watch, that is a question that has been answered overwhelmingly in favor of the growth in our ability to produce.

It's an imperfect measure, but, feel free to take a look in the growth of global GDP per capita, which captures precisely the question you are addressing of whether or not we are increasing people without creating more wealth (we are not).

Quote:
is simply diluting the capital accounts of the shareholders - creating more money through debt results in inflation, which is one expression of share dilution. To truly and sustainably make us all more financially wealthy, as you aver, the creation of real wealth must grow to keep pace. I have a suspicion that all real wealth originates from natural resources, which means that on the face of it, more natural resources need to be consumed to support growth. The exploitation of abundant natural resources is probably the real reason behind your assumption of a wealthy global population and not Capitalism, but there is ample evidence that externalized costs abound, and the natural resources gravy train is tipping into the abyss. You know the huge national/global financial debt? That is a reflection of our natural resources debt. We are not sustainably wealthy, we are in deep shiit triple-bottom-line debt, living on advances on the global credit card.


Sure. The Peak Oil people used to make the same argument, and were proven wrong every time.

Malthus had a strong argument in a pre-industrial, pre-capitalist world. But we are no longer in that world smile The Malthusian Trap you describe we seem to have escaped quite nicely, and I, for one, am heartily glad we did.
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#326794 - 06/20/20 09:01 PM Re: What is wealth? How is it made? How is it accounted? [Re: CPWILL]
logtroll Offline
veteran

Registered: 04/26/10
Posts: 10735
Loc: One of the Mexicos
Originally Posted By: CPWILL
Malthus had a strong argument in a pre-industrial, pre-capitalist world. But we are no longer in that world smile The Malthusian Trap you describe we seem to have escaped quite nicely, and I, for one, am heartily glad we did.

Do you have any facts, or just vague ideological ramblings?
_________________________
“You never change things by fighting the existing reality.
To change something, build a new model that makes the old model obsolete.”
– R. Buckminster Fuller

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#326802 - 06/20/20 10:42 PM Re: What is wealth? How is it made? How is it accounted? [Re: logtroll]
CPWILL Offline
newbie

Registered: 12/26/19
Posts: 481
Originally Posted By: logtroll
Originally Posted By: CPWILL
Malthus had a strong argument in a pre-industrial, pre-capitalist world. But we are no longer in that world smile The Malthusian Trap you describe we seem to have escaped quite nicely, and I, for one, am heartily glad we did.

Do you have any facts, or just vague ideological ramblings?


That we have escaped the Malthusian trap thanks to industrialization and capitalism?

Sure.

As those twin engines kicked into gear, we went from a global poverty rate of 94% in 1820 to 17% in 2011:

  • In 1820the share of the global population living in poverty was 94 percent while 84 percent lived in "extreme" poverty. By 1992, the poverty rate had dropped to 51 percent, while the "extreme" poverty rate had dropped to 24 percent. Using a different measure of international poverty, the rate has dropped from 53 percent in 1981 to 17 percent in 2011 – representing the most rapid reduction in poverty in world history.


As is usually the nature of growth, it accelerates when it compounds, and much of that came in the latter portion. Fortunately, Growth in url=https://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG]Global GDP Per Capita[/url][/b] has only been negative for three years since 1961 (though hey, 2020 may give us a fourth - we'll see).

This forum, tragically, can't support images very well (or, if it does, I haven't cracked the code on how), but, thanks to good ole capitalism, we reduced global poverty by 80% in 36 years - a single generation. An amazing achievement, unmatched in the history of our species smile If you take all gains into account, humanity is now an amazing 1,200% better off than we were in 1800.

One can go on and on in this vein - from global life expectancy to child mortality rates to disease, to ease, to luxuries-that-become-basic-necessities, we have more than escaped the Malthusian trap - we have accelerated beyond it like a space-fairing rocket escaping the atmoshpere.


Edited by CPWILL (06/20/20 10:43 PM)
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#326805 - 06/20/20 11:13 PM Re: What is wealth? How is it made? How is it accounted? [Re: CPWILL]
logtroll Offline
veteran

Registered: 04/26/10
Posts: 10735
Loc: One of the Mexicos
Originally Posted By: CPWILL
As those twin engines kicked into gear, we went from a global poverty rate of 94% in 1820 to 17% in 2011:

  • In 1820the share of the global population living in poverty was 94 percent while 84 percent lived in "extreme" poverty. By 1992, the poverty rate had dropped to 51 percent, while the "extreme" poverty rate had dropped to 24 percent. Using a different measure of international poverty, the rate has dropped from 53 percent in 1981 to 17 percent in 2011 – representing the most rapid reduction in poverty in world history.

I presume that you are prepared to demonstrate how this is the sole and direct result of that ghostly spectre called Free-Market Capitalism?
_________________________
“You never change things by fighting the existing reality.
To change something, build a new model that makes the old model obsolete.”
– R. Buckminster Fuller

Top
#326806 - 06/20/20 11:25 PM Re: What is wealth? How is it made? How is it accounted? [Re: logtroll]
logtroll Offline
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Registered: 04/26/10
Posts: 10735
Loc: One of the Mexicos
Is it possible that the same, or even superior, effects could have been achieved with a business model such as this one?

Quote:
1.2 Purpose. The Company has been formed:

To innovate, design, manufacture, and distribute equipment for the production of biochar, energy and related products using low value biomass at a community scale.

To engage in all activities necessary, customary, convenient or incidental to the foregoing, and when doing so, make a concerted effort to incorporate the Triple Bottom Line -- community and environmental effects, economics and profit, and social considerations -- into the Company’s operations, evaluation, and decision making processes, as articulated in our Values.

While the Company is organized as a for-profit organization, our Values direct we embrace a philosophy of business with purpose that addresses how we benefit (or impact) our community, employees, stakeholders, the natural environment, and customers. We hold ourselves to a higher standard than simply looking only at how much profit can be extracted from this business. The Company’s Operating Members shall measure their decisions, actions, and operations of the Company against the following:

People: TW will strive to create meaningful jobs in rural areas and local economies, seeing that the benefits are widely distributed and not concentrated in mega factory facilities.

Planet: Every aspect of the lifecycle of TW products will be developed to create a system of leveraged synergies resulting in regeneration of environmental health.

Profit: It takes money to launch and grow any effort, whether for profit or not. But the opportunity to make a profit better supports long term vigor and sustainability than a donation-based enterprise - and the government is not a suitable entity to lead the way. TW believes that our culture’s current overemphasis on profit is one of the major drivers of environmental and social decay, and is following a new ethic - one where money is regarded as a tool for more success and community stability, and not as a treasure to be hoarded.
_________________________
“You never change things by fighting the existing reality.
To change something, build a new model that makes the old model obsolete.”
– R. Buckminster Fuller

Top
#326809 - 06/21/20 01:08 AM Re: What is wealth? How is it made? How is it accounted? [Re: logtroll]
CPWILL Offline
newbie

Registered: 12/26/19
Posts: 481
Originally Posted By: logtroll
Originally Posted By: CPWILL
As those twin engines kicked into gear, we went from a global poverty rate of 94% in 1820 to 17% in 2011:

  • In 1820the share of the global population living in poverty was 94 percent while 84 percent lived in "extreme" poverty. By 1992, the poverty rate had dropped to 51 percent, while the "extreme" poverty rate had dropped to 24 percent. Using a different measure of international poverty, the rate has dropped from 53 percent in 1981 to 17 percent in 2011 – representing the most rapid reduction in poverty in world history.

I presume that you are prepared to demonstrate how this is the sole and direct result of that ghostly spectre called Free-Market Capitalism?



Who said anything about sole? We also, for example, got these real nifty computer things smile


Should we take your unwillingness to directly respond as implicit acceptance of the point regarding capitalism and industrialization leaving us better off?


Edited by CPWILL (06/21/20 01:12 AM)
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#326810 - 06/21/20 01:12 AM Re: What is wealth? How is it made? How is it accounted? [Re: logtroll]
CPWILL Offline
newbie

Registered: 12/26/19
Posts: 481
Originally Posted By: logtroll
Is it possible that the same, or even superior, effects could have been achieved with a business model such as this one?

Quote:
1.2 Purpose. The Company has been formed:

To innovate, design, manufacture, and distribute equipment for the production of biochar, energy and related products using low value biomass at a community scale.

To engage in all activities necessary, customary, convenient or incidental to the foregoing, and when doing so, make a concerted effort to incorporate the Triple Bottom Line -- community and environmental effects, economics and profit, and social considerations -- into the Company’s operations, evaluation, and decision making processes, as articulated in our Values.

While the Company is organized as a for-profit organization, our Values direct we embrace a philosophy of business with purpose that addresses how we benefit (or impact) our community, employees, stakeholders, the natural environment, and customers. We hold ourselves to a higher standard than simply looking only at how much profit can be extracted from this business. The Company’s Operating Members shall measure their decisions, actions, and operations of the Company against the following:

People: TW will strive to create meaningful jobs in rural areas and local economies, seeing that the benefits are widely distributed and not concentrated in mega factory facilities.

Planet: Every aspect of the lifecycle of TW products will be developed to create a system of leveraged synergies resulting in regeneration of environmental health.

Profit: It takes money to launch and grow any effort, whether for profit or not. But the opportunity to make a profit better supports long term vigor and sustainability than a donation-based enterprise - and the government is not a suitable entity to lead the way. TW believes that our culture’s current overemphasis on profit is one of the major drivers of environmental and social decay, and is following a new ethic - one where money is regarded as a tool for more success and community stability, and not as a treasure to be hoarded.



....you mean a capitalist one? smile

Congrats on coming on the longer way round to a point I made earlier - that you actually got environmental concern from later-stage capitalism, as opposed to other economic models of organization.

Respectfully, you seems as though you are arguing against a strawman, here, confusing "capitalism" with "greed".
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