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Zero-Sum Wealth, who wins?

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dcfirefighter Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Nov-11-05 11:26 PM
Original message
Poll question: Zero-Sum Wealth, who wins?
I don't believe that the creation of Wealth (Food, Clothing, Homes, Possessions, etc.) is a zero-sum game. I believe that more value is created than is consumed. I know this is true, because companies operate with profits.

Who has the most moral right to his share of the revenue?
Who would likely take his toys elsewhere, if he considered his tax burden too great?

Conversely, and this is the POLL QUESTION, who has the least moral argument against taxation?
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eallen Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Nov-11-05 11:41 PM
Response to Original message
1. Seems a very silly question to me.
I can imagine quite a few reasons for favoring or opposing taxing regimens that are, if not measurable in practice, at least have some meaning that leads to analysis. For dollar collected, how do different kinds of taxes vary in hindrance of growth, overhead of taxation, biases with regard to age, or income, or wealth, intrusiveness of taxation, neutrality with regard to the economy? That leads to a reasonable way to discuss taxes, even among people whose priorities differ.

But what kind of tax is more moral? That just leads to religious discussion, in the worst sense of the term.
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dcfirefighter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-12-05 12:14 AM
Response to Reply #1
4. Morals .ne. Religion
but I see your point. Of course discussing economics is rarely as dispassionate and rational as economists would like to believe. So, a moral basis is good enough for me.

I think you'd find the same answer either way.
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politicat Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-12-05 12:03 AM
Response to Original message
2. Um... but it is a zero sum.
Because it takes resources, human input and capital to create wealth, all three of those must be infinite for the product to not be a zero-sum.

Resources are not infinite. We live on a limited amount of water, air, oil, soil, etc. Because that is limited, the creation of wealth is by definition a zero-sum.
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dcfirefighter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-12-05 12:12 AM
Response to Reply #2
3. How then
can I take $10 worth of labor and $1 worth of material, and sell it for $15?

Where'd the $4 come from?
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politicat Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-12-05 01:35 AM
Response to Reply #3
5. resources, *human input* and capital
Read my previous more clearly, please.

I'm not disagreeing that human input is not valuable - it is. The disagreement I have with your theory is that resources are not infinite, and to make an infinite economy, all three factors would have to be fully infinite, otherwise the economy is limited by whichever factor of the three is also limited.

For example: there's an unlimited supply of therbibbles, needed to make widgets. However, there are only 10,000 people on the planet who know how to make therbibbles into widgets, and the process to learn how to make therbibbles into widgets is a long, slow and exacting process. Thus, the production of widgets is limited by the human input required to convert therbibbles into widgets.

Another example: The knowledge to make thingamammies is free and easily learned, there are lots of people able to make thingamammies, but thingamammies have to be made out of kraplach, and that's in limited supply. Thus, the market for thingamammies is limited by the supply of kraplach.


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dcfirefighter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-12-05 02:13 AM
Response to Reply #5
6. That makes it limited in the short term, not zero sum
therbibbles are unlimited, therefore they're cheap.
widget craftspeople are rare, and therefore expensive.
cheap + expensive = still expensive, so widgets are expensive.

supply of therbibbles decreased by 1
supply of widget craftspeople - no change
supply of widgets + 1
net value change = +1 expensive - 1 cheap (positive net value, ergo not zero sum)

_____________

kraplach is in limited supply, therefore expensive
thingamammy crafstpeople common, therefore cheap
expensive + cheap = still expensive

supply of kraplach -1
supply of thingamammy craftspeople n/c
supply of thingamammies +1
net value change = +1 expensive - 1 cheap (postive net value)

_______________
in each of these productions, the value was increased by the value added by the laborer (as set by market demands). The laborer was not decreased. Now lets sell our widget and thingamammy and see what happens
________________

the widget craftsperson sold his widget, and turned around to pay the guy he got the therbibble from, pocketing a nice chunk of change.

The thingamammy craftsperson sold his widget, turned around, and gave most of the money to the guy he got his kraplach from.

_________________

So, all the revenue from sales disappeared, didn't it?
Where's my surplus?

The widget craftsman has a valuable skill. He could have gone elsewhere to apply his trade. He had to get paid, or the widget wouldn't have gotten made.

The therbibbles would have been there anyway. No one made them. Paying for them is a bit assinine.

______
How about the other case?

The thingamammy craftstman has a less valuable skill, but still he has to be induced to use it. He takes his cut.

The supplier of the kreplach has a valuable commodity but who supplied it? How do you pay him? Why does he own it? That's why this is where the surplus goes. The kreplach supplier gets paid for the work nature did? Because he 'owned' the kreplach?

Note that if the kreplach supplier did any actual work in getting the kreplach from it's natural state to market, then he too would earn a wage. As it is, he's getting paid 'Rent' for the use of a natural resource that somehow he was recognized as owning.

______________

The surplus goes to the owner of land and natural resources - what Adam Smith termed "Land" as part of the factors of production.
"Land" + "Labor" + "Capital" = "Wealth"
It wasn't until later that the austrians conflated land with capital.
They then had to have a reason for someone to get the surplus, so the took a subset of labor, labled it "Entrepreneurship", and allowed that person to keep the surplus, labeled "Profit".


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eallen Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-12-05 09:55 AM
Response to Reply #2
7. That's an egregious and dangerously wrong understanding of wealth.
It doesn't take infinite resources to make the world better, just the ever better application of finite resources. Economic growth measures improvement, not increase in mass or energy. If you doubt that there has been tremendous progress over the last two centuries, compare a visit to a surgeon or dentist today, with one in the 18th century. Or compare your PC with Babbage's difference engine. Or compare your keychain flashlight to the candle that would have been used instead. Does any of this require the expenditure of more resources? No. Babbage's difference engine, which only calculated polynomials, was a major research project in his time, consumer decades of research by some of the day's leading scientists, considerable effort by machinists, and that eventually was finished only after his death.

Those who don't understand how economic progress is possible are all too likely to propose economic policies that don't respect it.
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dcfirefighter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Nov-12-05 11:35 AM
Response to Reply #7
8. I'm quite aware of the finite resources
teh economc policies I propose deal with them better than any I've seen elsewhere.

The most finite of our resources are those that are limited by the laws of physics, otw known as natural resources.

The second most finite of our resources is limited by our population.

The least limited of the factors of production is capital - it is almost always substitutable, and can almost be improved with more labor. A good example would be your torch - candle - lantern - flashlight - LED keylight. While each iteration might use fewer land inputs per watt-hour of light provided, each iteration uses more capital (more complex machinery) and more labor (higher skilled craftsmen).

Recognizing that the returns to ownership of natural resources are NOT due to the production of those resources, but rather due to the possession of a community/government granted title is the key. Those resources would be there regardless of who owned them, the current 'owner' is only allowed to charge for their use due to the title granted them. As such, such revenue could be publicly collected without decreasing the amount of such resources available for production.

Additionally, if the means of collecting such value is due to a periodic rental charge, there is no financial reason for witholding those resources from production - there is no speculative value, and as such access to such resources would become slightly cheaper to the potential producer - and the quality of such resources available would improve, as only the best of the available resources would be used for production. Marginal resources would not be used until the premium resources were exhausted or occupied.

With natural resources efficiently allocated economic pressures, and no tax burden on the owners of capital or labor, the use of 'Land' is minimized while the use of labor and capital (stored labor & a bit of land) is maximised.
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