Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
Thank you Chris. Great link. Although, i don't really understand what Mr. Bezemer means with "accounting model". Even that Hudson's model is too complicated ;). Only 3 boxes would be necessary: Fire-Production-Government. Only Production creates wealth, others are costs.
There is a basic contradiction in this neoclassical economics. To create wealth the costs should be low and production high. However, FIRE-sector has no incentive to be "cheap". On the contrary they try to grab "profits" as much as they can. And increase costs as much as possible. Wealth creation is destroyed and no one sees it coming.
by kjr63 on Sun Jul 12th, 2009 at 04:10:40 PM EST
Depends what you mean by Wealth....

You can have high production of lots of low cost stuff, but it's not exactly what most people would understand as "wealth" even though it may create lots of fiat money aka IOU claims over wealth.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Jul 12th, 2009 at 05:37:24 PM EST
[ Parent ]
... it takes going concerns to produce, but that does not mean that the productivity of going concerns is independent of their context.

So, while obviously markets create nothing, they are effective institutions to permit the decentralization of the creation process.

And going concerns are not restricted to the formal "productive" sector ... all modern industrial economies involve a mix of productive activity by privately directed going concerns and by publicly directed going concerns.

And of course, while we imagine that industrialization as a linear process of abstraction of production from the household sector, with the decline of household subsistence production ... there are certain zones where we have become accustomed to finishing the production process after buying the product ...

... and it seems likely that the average share of subsistence production in the household sector will begin to rise again over the century ahead.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Jul 12th, 2009 at 07:07:12 PM EST
[ Parent ]
"wealth": It took me a long time to arrive at meaningful translation, in fact a close encounter with AmEx hiring inquisition. Wealth is a synonym of permissable leverage and is not equivalent to market value of assets (e.g. gold bracelets) or even reported net income (e.g. liquidity). It is a political trope, of this I am convinced.

Diversity is the key to economic and political evolution.
by Cat on Sun Jul 12th, 2009 at 07:23:43 PM EST
[ Parent ]
Yep - it's a symbol for permissable leverage.

You can create wealth just by being aggressively leverage-ish enough.

The current cult of wealth is a feudal cult of leverage. The associated numbers are a misdirection.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Jul 12th, 2009 at 08:44:27 PM EST
[ Parent ]
The feudal system has rights and obligations both ways. The current system is one way, thus not particularly feudal.

--
$E(X_t|F_s) = X_s,\quad t > s$
by martingale on Tue Jul 14th, 2009 at 08:21:41 PM EST
[ Parent ]
nitpicker :D

Diversity is the key to economic and political evolution.
by Cat on Wed Jul 15th, 2009 at 01:49:13 AM EST
[ Parent ]
... system involved rights and obligations in both directions ... in many cases the flows of rights and obligations amongst members of the feudal aristocracy worked better than the flow of obligations from the aristocracy to the commons, which were in many cases honoured in the breach rather than the act.
 

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Thu Jul 16th, 2009 at 03:37:11 PM EST
[ Parent ]
MarketTrustee:
Wealth is a synonym of permissable leverage
Excellent insight.

The peak-to-trough part of the business cycle is an outlier. Carnot would have died laughing.
by Migeru (migeru at eurotrib dot com) on Wed Jul 15th, 2009 at 04:14:31 AM EST
[ Parent ]
Yes, not all production is wealth. My idea is that wealth is a "surplus" with useful "use value".. or something like that..
by kjr63 on Sun Jul 12th, 2009 at 07:38:18 PM EST
[ Parent ]
... wealth with the ability to claim a share of the wealth produced by others.

"Wealth" in the financial press is a position in the interstices of the system that allows the person in that position to extract a toll from the going concerns that generate actual wealth in return for permission for to be allowed to generate that wealth.

"A lovely little productive enterprise you got 'ere, guv'na, shame if somefink was to 'appen to it..."

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Jul 13th, 2009 at 12:22:31 AM EST
[ Parent ]
I don't know if i understood you correctly, but i guess we talking about the same thing. Wealth is the amount of (useful) produced goods and services, whatever the amount of claims (money, financial assets) to this wealth there are.
by kjr63 on Mon Jul 13th, 2009 at 10:42:39 AM EST
[ Parent ]
How are you defining "useful"?
by Colman (colman at eurotrib.com) on Mon Jul 13th, 2009 at 10:49:19 AM EST
[ Parent ]
Oh boy, improves the well being of human race..
If we look this thing from purely economic perspective, i guess it is possible to make a quite good definition of "wealth." However, all values are not economic. And "wealth" should be approached from different angles. By people with different perspective.
by kjr63 on Mon Jul 13th, 2009 at 01:12:46 PM EST
[ Parent ]
As noted elsewhere in the comment thread, 'wealth' as used in the context of the financial press is "ability to hold up the productive sector for ransom", so in your terms, the phrase "wealth creation" in the financial press refers to an increase in the ability to grab wealth created by someone else.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Mon Jul 13th, 2009 at 11:03:41 AM EST
[ Parent ]
Obviously they use the term like that, but issuing claims to wealth does not create wealth. It just transfers money from one pocket to another. Perhaps they think that money in the pocket of "serious people" is better than in the "non-serious".
by kjr63 on Mon Jul 13th, 2009 at 01:33:41 PM EST
[ Parent ]
But this is a semantic argument. You use the word wealth to mean one thing. They use the word wealth to mean something else.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Mon Jul 13th, 2009 at 03:17:43 PM EST
[ Parent ]
You have the right idea, if you want to be sane about it (which is usually disadvantageous these days), but you're confusing the ability to produce stuff of actual value (cars, sofas, computers, whatever) and accumulate assets while reducing -- at least relative to assets -- liabilities with the assortment of clowns and criminals playing hot potato with funnymoney.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Mon Jul 13th, 2009 at 08:42:36 AM EST
[ Parent ]

Display:

Top Diaries

Occasional Series