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David Lucifer
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Who deserves wealth?
« on: 2004-01-01 22:27:59 » |
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A simple question, but I'm not sure there is a simple answer. Who deserves to be relatively wealthy?
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David Lucifer
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Re:Who deserves wealth?
« Reply #2 on: 2004-01-03 12:19:31 » |
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Quote from: Ophis on 2004-01-02 17:53:49
A simple answer: Those who produce wealth. |
OK, what does it mean to produce wealth? To be wealthy is to have a relatively large net worth in terms of assets, tangible and monetary. Given that view it isn't obvious how to produce wealth; obviously you don't mean printing money.
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Ophis
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Re:Who deserves wealth?
« Reply #3 on: 2004-01-03 12:53:05 » |
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Quote from: David Lucifer on 2004-01-03 12:19:31 | OK, what does it mean to produce wealth? To be wealthy is to have a relatively large net worth in terms of assets, tangible and monetary. Given that view it isn't obvious how to produce wealth; obviously you don't mean printing money. |
See Frederick Bastiat's "Hateful Money" (attached), which discusses the difference between money and wealth, and the consequences of mistaking them for being the same.
Money is simply a medium of exchange. Wealth is in the things being exchanged, NOT in money. You might think the difference is academic but it has real-world consequences in how governments legislate foreign exchange and manipulate monetary policies.
Those who deserve to be wealthy are those who produce wealth. Producing wealth means creating goods and services that are wanted, that serve purposes to oneself and others, that push progress forward, etc.
From the attached text:
Quote:| And if gold is considered to be riches, the natural conclusion is, that displacements of fortune take place among men, but no general progress. It is just what I said when I began. If, on the contrary, you look upon an abundance of useful things, fit for satisfying our wants and our tastes, as true riches, you will see that simultaneous prosperity is possible. Money serves only to facilitate the transmission of these useful things from one to another, which may be done equally well with an ounce of rare metal like gold, with a pound of more abundant material as silver, or with a hundredweight of still more abundant metal, as copper. According to that, if a country like the United States had at its disposal as much again of all these useful things, its people would be twice as rich, although the quantity of money remained the same; but it would not be the same if there were double the money, for in that case the amount of useful things would not increase. |
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David Lucifer
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Re:Who deserves wealth?
« Reply #4 on: 2004-01-03 18:05:22 » |
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A very interesting article, thanks. I think this part was salient to the issue you brought up:
Quote:We are agreed,then,upon this point —that wealth is the mass
of useful things which we produce by labor;or,still better,the result of all the
efforts which we make for the satisfaction of our wants and tastes.These use-
ful things are exchanged for each other,according to the convenience of those
to whom they belong.There are two forms in these transactions;one is called
barter:in this case a service is rendered for the sake of receiving an equivalent
service immediately.In this form transactions would be exceedingly limited.
In order that they may be multiplied,and accomplished independently of time
and space amongst persons unknown to each other,and by infinite fractions,
an intermediate agent has been necessary —this is money.It gives occasion for
exchange,which is nothing else but a complicated bargain.
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I agree that money is not wealth, it is more like an IOU for wealth. Even after reading the article I'm a bit hazy on what units we should use to measure value and wealth if not in terms of currency. Do you have any insight there?
So to turn the question around a bit, do you think that everyone that has acquired great wealth legally is deserving of their wealth? Or do you allow that there may be legal yet immoral ways of acquiring wealth. I'm assuming that there are not any ways to morally gain wealth illegally, but I could be mistaken and would be interested in any counterexamples.
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romanov
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Doctor of Philosophy? What disease is that?
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Re:Who deserves wealth?
« Reply #5 on: 2004-01-04 10:38:29 » |
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I also have a question, Ophis. You define those who produce wealth as those deserving of it.
Does that mean those who inherit money/wealth are not deserving of it?
By the same token, what about those who manipulate money/wealth, without actually creating anything?
And how do you define production? If a factory worker or educated professional uses their skills, knowledge and efforts to create something, what about those who profit by it by proxy, without actually contributing anything to its creation?
The factory owner, for example- does he not deserve to profit from the workers underneath him by this logic? Or the corporate executive who benefits from the computer programmers skill merely by being in the right position in the company at the right time?
I'm sure you would agree with me that they would deserve to profit from it. But your logic doesn't say why.
To 'earn' something is a value judgement that we impose on others. For example, if someone is elected in a democracy to become a head of state, it is because we make a value judgement that they have 'earned' it by following the electoral process and winning according to those rules. If everyone concerned suddenly changes their value system, that person is no longer in that position.
The 'earning' of wealth is no different. We set a series of broad rules, and if those rules are met, we then make a value judgement that the wealth belongs to them. There is no law of physics or divine ruling that says otherwise.
The key thing is how the rules are set.
And to answer David Lucifer's question, illegal actions would necessarily (at least in a country with rule of law) fall outside of these rules, and therefore we would judge that they have not 'earned' that wealth.
romanov
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Ophis
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Re:Who deserves wealth?
« Reply #6 on: 2004-01-04 15:37:37 » |
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Quote from: David Lucifer on 2004-01-03 18:05:22 | I agree that money is not wealth, it is more like an IOU for wealth. Even after reading the article I'm a bit hazy on what units we should use to measure value and wealth if not in terms of currency. Do you have any insight there? |
Value and wealth are subjective. I value this particular pen that my parents gave me before I left for college when I was a kid. It's not a particularly expensive pen and yet I value it as such. Some people consider themselves to be wealthy (a loving family, close friends, good pets, etc) although their annual monetary income might suggest otherwize.
There is no known way to measure wealth and value. It is like trying to measure love and happyness.
Quote:| So to turn the question around a bit, do you think that everyone that has acquired great wealth legally is deserving of their wealth? Or do you allow that there may be legal yet immoral ways of acquiring wealth. I'm assuming that there are not any ways to morally gain wealth illegally, but I could be mistaken and would be interested in any counterexamples. |
I do not think that everyone that has acquired great wealth legally is deserving of their wealth, which means that I think that there are legal yet immoral ways of acquiring wealth. I would also add that there are moral ways to gain wealth that are considered illegal.
Some examples: In my opinion, there are numerous laws that are immoral. One obvious area of controversy (meaning that some find it moral and other immoral) is affirmative-action programs. If you think that affirmative-action is immoral, you would also have to agree that if one acquires some wealth as a result of an affirmative-action program, that wealth was acquired immorally.
I personally also think that many of the leading corporations in a number of industries have acquired great wealth as a result of their lobbying activities. Although the wealth of the managers, employees, and investors, might be acquired legally, I would question that it is acquired morally. The banking and finance industry is a particularly strong focal point of such immoral government protectionism in favor of a few well connected organizations. Our entire banking system, based on fractional-reserve banking, looks more like a legally protected money counterfeiter cartel to me than a regular business industry.
If you recognize this, you probably won't have too much difficulty at finding illegal yet moral ways to acquire wealth. Hint: have a look at all the victimless crimes that could go on in a society without violating others that are arbitrarily made illegal by the government.
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Ophis
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Re:Who deserves wealth?
« Reply #7 on: 2004-01-04 19:01:29 » |
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Quote from: romanov on 2004-01-04 10:38:29 | I also have a question, Ophis. You define those who produce wealth as those deserving of it. |
I do.
Quote:| Does that mean those who inherit money/wealth are not deserving of it? |
I mean no such thing. Even those who inherit tremendous wealth need to keep significant portions of it in wealth-producing endeavors in order to maintain it. Also keep in mind that the inherited wealth was originally acquired from productive operations (or so we assume; I grant you that there are immoral and unproductive ways to acquire wealth) and that having the ability to transfer the wealth to one's progeny might have been the sole motivation behind the entire wealth-producing efforts. In many cases, I would also suspect that the billionaire who transfers his wealth to a daughter or to a foundation actually hopes and expects the recipient to keep the wealth in productive use. But that's just a guess. The point is that when one acquires wealth, one should morally be allowed to dispose or invest it in whatever ways one deems appropriate, including transfering it to one's progeny.
Quote:| By the same token, what about those who manipulate money/wealth, without actually creating anything? |
I wonder what you mean by "manipulating" money. If you mean investing money, I would argue that it is one of the most important creative force of our economy. Without people investing their money in productive projects, these projects would never see the light of day, production and progress would stagnate, and our entire economy would ultimately crumble. I'd say that this is far from not "creating anything".
Quote:| And how do you define production? If a factory worker or educated professional uses their skills, knowledge and efforts to create something, what about those who profit by it by proxy, without actually contributing anything to its creation? |
I am able to find two categories of people who benefit "by proxy" from other people's wealth without contributing anything to it.
The first category is composed of each and every one of us who live in social proximity to the newly created wealth. Simply by being born in Canada, without having to produce anything, I benefit tremendously from wealth that was created by others because the wealth is easily available to me. For example, you won't be able to buy a new DVD player for $29USD in Iran.
The second category of people who benefit "by proxy" isn't as morally justifiable as the first one: it is the politicians and all government workers who's income comes from wealth taxation. Good luck trying to create wealth without the government claiming a portion of it.
Quote:The factory owner, for example- does he not deserve to profit from the workers underneath him by this logic? Or the corporate executive who benefits from the computer programmers skill merely by being in the right position in the company at the right time?
I'm sure you would agree with me that they would deserve to profit from it. But your logic doesn't say why. |
I didn't think it was necessary for me to explain the purpose of investors, directors, executives, and managers in the corporate structure. But just to be clear: the investors, executives, & all levels of management contribute to the wealth creation of the corporation or the enterprise that employs them. Their contribution to wealth creation is rewarded by as much compensation or profit as the market will bear.
Quote:| To 'earn' something is a value judgement that we impose on others. |
I'm not sure I understand what you mean by this sentence. Who is this "we" that "imposes" a "value judgement"?!
Quote:For example, if someone is elected in a democracy to become a head of state, it is because we make a value judgement that they have 'earned' it by following the electoral process and winning according to those rules. If everyone concerned suddenly changes their value system, that person is no longer in that position.
The 'earning' of wealth is no different. We set a series of broad rules, and if those rules are met, we then make a value judgement that the wealth belongs to them. There is no law of physics or divine ruling that says otherwise. |
The only "broad rule" we need to set here is the ownership of private property. Assuming that we accept that one may claim ownership rights to property, everything else can be left to the market. I agree that there is no need to involve divine ruling here but I disagree that anyone is "imposing" any "value judgement" on anyone else.
The only way I can make sense of what you are saying is in the market process. As a consumer, I make a judgement of how I want to spend my money and in so doing, I "reward" this or that producer. It'd be silly to say that I am "imposing" my "values" on Wal-Mart when I decide to buy (or not buy) some of their products.
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David Lucifer
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Re:Who deserves wealth?
« Reply #8 on: 2004-01-04 19:02:09 » |
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Quote from: Ophis on 2004-01-04 15:37:37
Value and wealth are subjective. I value this particular pen that my parents gave me before I left for college when I was a kid. It's not a particularly expensive pen and yet I value it as such. Some people consider themselves to be wealthy (a loving family, close friends, good pets, etc) although their annual monetary income might suggest otherwize.
There is no known way to measure wealth and value. It is like trying to measure love and happyness. |
Sure there is. Economists do this by presenting a choice to the person: Would you rather have (object in question) or $X? In other words, would you be willing to sell your pen for $X? I'm willing to bet there is some minimum positive number that could be assigned to the variable X for which you would answer in the affirmative. I'm also willing to bet that number is between $10 and $1 million. Am I right?
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David Lucifer
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Re:Who deserves wealth?
« Reply #9 on: 2004-01-04 19:07:54 » |
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Quote from: Ophis on 2004-01-04 19:01:29 | The point is that when one acquires wealth, one should morally be allowed to dispose or invest it in whatever ways one deems appropriate, including transfering it to one's progeny. |
I agree that the person that earned the wealth should have the right to dispose of that wealth in whatever way they choose. But I fail to see how the heir to the wealth earned it by your own definition. What wealth did they generate in order to justify their inheritance?
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Ophis
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Re:Who deserves wealth?
« Reply #10 on: 2004-01-05 01:56:41 » |
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Quote from: David Lucifer on 2004-01-04 19:02:09 | Sure there is. Economists do this by presenting a choice to the person: Would you rather have (object in question) or $X? In other words, would you be willing to sell your pen for $X? I'm willing to bet there is some minimum positive number that could be assigned to the variable X for which you would answer in the affirmative. I'm also willing to bet that number is between $10 and $1 million. Am I right? |
Of course you can ask any one person to assign a dollar value for any thing, including one's pen, one's house, the life of one's mother, etc. But the point is that the dollar value assigned to any of those things is different from one person to another. The value is not intrinsic to the object, it is attributed to the object by the valuer.
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Ophis
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Re:Who deserves wealth?
« Reply #11 on: 2004-01-05 02:32:31 » |
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Quote from: David Lucifer on 2004-01-04 19:07:54 | I agree that the person that earned the wealth should have the right to dispose of that wealth in whatever way they choose. But I fail to see how the heir to the wealth earned it by your own definition. What wealth did they generate in order to justify their inheritance? |
A corporation doesn't "deserve" an investment before it actually generates a profit, yet most of us invest part of our wealth in corporations hoping to grow our wealth from the investment. Risk-taking is part of the wealth-production process. Sometimes the risk pays off and sometimes it doesn't. The same process applies to inheritance. Some heirs are wasteful and some heirs are productive. The wasteful heirs demonstrate that they did not "deserve" the wealth and are "punished" by the market by seeing their wealth drain away. The productive heirs demonstrate that they do "deserve" the wealth and are "rewarded" by the market by seeing their wealth grow.
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David Lucifer
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Re:Who deserves wealth?
« Reply #12 on: 2004-01-05 17:10:32 » |
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Quote from: Ophis on 2004-01-05 01:56:41
Of course you can ask any one person to assign a dollar value for any thing, including one's pen, one's house, the life of one's mother, etc. But the point is that the dollar value assigned to any of those things is different from one person to another. The value is not intrinsic to the object, it is attributed to the object by the valuer. |
Of course, and this seems to be quite a departure from the claim that there is no known way to measure value. Wouldn't you agree that the stock market, for instance, does a reasonable job of measuring the value of shares of publicly traded corporations by taking into account all the subjective valuations of the participants in the market?
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David Lucifer
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Re:Who deserves wealth?
« Reply #13 on: 2004-01-05 17:20:51 » |
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Quote from: Ophis on 2004-01-05 02:32:31
A corporation doesn't "deserve" an investment before it actually generates a profit, yet most of us invest part of our wealth in corporations hoping to grow our wealth from the investment. Risk-taking is part of the wealth-production process. Sometimes the risk pays off and sometimes it doesn't. The same process applies to inheritance. Some heirs are wasteful and some heirs are productive. The wasteful heirs demonstrate that they did not "deserve" the wealth and are "punished" by the market by seeing their wealth drain away. The productive heirs demonstrate that they do "deserve" the wealth and are "rewarded" by the market by seeing their wealth grow. |
I'd agree with that except to point out that wealth does not have to grow in order to be spent productively.
So we have two cases of people that deserve wealth, those that earn it, and those that got it from an investment of some sort. In both cases the wealth was transferred willingly from someone that had it to the person that deserves it. Could that be the common denominator? In the case of the person that earned the wealth by generating wealth, they receive it through trade. In the other case, they receive it because others believe (for whatever reason) that it will pay off eventually, whether investing in a corporation or in an heir.
To test the common denominator hypothesis let's look at a previously unexamined case. What if someone gets wealthy by winning a lottery or some kind of wager? Do they deserve it?
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Ophis
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Re:Who deserves wealth?
« Reply #14 on: 2004-01-06 03:25:24 » |
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Quote from: David Lucifer on 2004-01-05 17:10:32 | Of course, and this seems to be quite a departure from the claim that there is no known way to measure value. Wouldn't you agree that the stock market, for instance, does a reasonable job of measuring the value of shares of publicly traded corporations by taking into account all the subjective valuations of the participants in the market? |
I would agree with this. I should simply have said that two people can't be expected to value one thing the same way. While the market provides an aggregate measure of value, I might personally think that the market is over-valuing a particular stock, while you might think the same stock is under-valued. In a case like this, I would sell the stock with the expectation of a decline in price and you would buy it, expecting the price to climb in the future. The market always seeks this "equilibrium" but never reaches it.
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Bastiat_-_Hateful_Money.pdf
