It's important to keep in mind that there is a distinction between wealth and money. Wealth is a measure of how much stuff people have that they actually value for its own sake. Food, housing, clothing, shelter, and artwork, are all examples of wealth. Money, by way of contrast, is merely an accounting mechanism that humans have invented in order to facilitate trade. Money and wealth often go together, but they are completely different things. You can transform money into wealth, and vice versa (which is the whole point of having money), but you can have money without wealth and vice versa. And you can make (or earn) money without creating wealth, and vice versa. But historically, the most reliable and the most socially beneficial way of making money is to create wealth. So to help encourage that, here's a more or less comprehensive list of fundamental mechanisms of creating wealth.
Brilliant! This should be required reading for everyone even thinking about going into politics or finance. Even economists seem to miss this one on an uncomfortably regular basis.
> (Donald Gibbs, of Pearl-Harbor conspiracy-theory infamy)
I had thought thae "USA wanted in to WWII and provoked Japan" was just a generally accepted position by most everyone who'd looked into it.
United States companies were responsible for 80% of Japan's oil. U.S. Government bans companies from exporting oil to Japan, declares Japan "a hostile nation", and starts stationing more troops, supplies, and armaments in the American-owned places you'd need troops to launch an attack against Japan.
Following the embargo, Japan goes into "oil shock". They're set to run out of oil in two years. Consumer prices for oil-based products go up 10x or more. The nearest place where there was oil was Indonesia, which was at the time was owned by European colonial powers already at war with Japan.
America owned the Philippines at the time. Japan's war was taking them into Indonesia. The United States had just declared Japan a hostile nation, embargoed them, and started moving troops and arms into the Philippines and Hawaii.
It was obvious Japan would attack the United States following those events. Since United States foreign intelligence and military analysis were very good at this time, the pretty obvious conclusion is that the U.S. Government wanted war with Japan. Later, Pearl Harbor was sold as attacking for no reason to the American people for PR reasons, but the leadership must have known that their actions made a Republic of USA/Empire of Japan war pretty inevitable.
Has everybody forgot about the invasion of China? The rape of Nanking? And when does an oil embargo cause another country to take up arms in a sneak attack?
Come on, guys, Japan always had the option of terminating their belligerence. There was a legitimate reason for the oil embargo, and it wasn't to provoke a war.
Well, sure, but one should be careful about bringing moral legitimacy into the discussion. We might accept that the US was a more benevolent hegemon, and still allow that it willfully provoked Japan to attack.
You seem to imply that since there was a legitimate reason, this was in fact the motive reason, or that legitimate motive precludes subterfuge.
I don't know why you're being moderated down. The Japanese had already begun conquering large swaths of East Asia, Southeast Asia, the Philippines, and so on.
A U.S.-Dutch oil embargo was hardly belligerent compared to the actual conquests of the Japanese.
The grandparent poster reads like they got their information about WWII from the Yasukuni Shrine museum...
I downvoted because it has nothing to do with the point under discussion, which is whether the US knew about Pearl Harbor before it happened. Imperial Japan certainly was nasty, but "Imperial Japan was nasty, so Donald Gibbs, lisper, and lionhearted are wrong about this factual question" is a non sequitur.
The popular mythology in the U.S. is that the attack was not only unprovoked but actually unexpected. Without this myth it's very hard to maintain our self-image as the Good Guys, particularly in light of Hiroshima and Nagasaki.
Didn't we lose a lot of ships though? If we thought they might do something like bomb pearl harbor, wouldn't we have spread out our ships, or kept the oldest ones at the harbor?
It seems like a bad strategy to sacrifice a significant amount of useful military assets in a false flag..ish operation.
Supposedly, the loss of the battleships was not prevented, as the Navy knew they were useless in modern warfare. This smacks of internal struggle and politics, between the two camps of naval warfare, carrier-based and battleship. The carrier guys took advantage of the situation to eliminate their opponents crown jewels.
Reminds me of a JL Borges piece in which he writes of a fictive Chinese encyclopedia in which animals are categorized as:
1. belonging to the Emperor
2. embalmed
3. trained
4. piglets
5. sirens
6. fabulous
7. stray dogs
8. included in this classification
9. trembling like crazy
10. innumerables
11. drawn with a very fine camelhair brush
12. et cetera
13. just broke the vase
14. from a distance look like flies
Your reader vitriolic isn't really grasping the particular distinction between "wealth" and "money" you're trying to make.
You really would want a three-way split between wealth and money and value; it's often the case that wealth production leads to value-destruction, which keeps things interesting.
It's also the case that once you have the three way wealth/value/money dynamic going you have to figure out:
- what are other people's states of mind in this classification? or, at least, what can they be?
Because, for example, in some sense fame is a kind of wealth -- it's useful if it's the right kind -- as is demand for your particular goods (or disdain for your competitor's wares), as it's also useful.
On the other hand it's not clear that it fits your description of wealth.
If it is wealth then advertisers and other persuaders count as wealth-producers.
If it isn't either you need a fourth category or you need to shoehorn it into some more-abstract notion of value.
Sidenote: I've always thought it extremely unfortunate that English uses the phrase "make money", as unless you're actually "making money" what you're doing is "getting money" (which phrase is, incidentally, apparently the vernacular amongst the unschooled dwellers of the inner city); first, rectify all the names.
This kind of sloppiness in language leads to worse derangements, as evidenced in Vitriolic's notion of creating wealth (what he's talking about is accumulating surplus wealth).
An impossible thing to really nail down and something people can spend their entire lives chasing their tails over. Intuitively there should be a difference (I'll justify the intuition in a second) but really making it precise is very tricky.
"Value of X" == what someone might pay for X; thus, if you have a barrel of oil and the current market price is $50/barrel then the value of your barrel is $50 (assuming you can get the market price for it, etc.); if tomorrow the market price
is $55 or $45 that's its value tomorrow.
If your primary interest in oil is buying it and selling it value is what you should care about.
Now, let's suppose your interest is in using that oil; you operate a machine shop and the oil is enough fuel to run some machine for a week.
How long the oil powers your machine doesn't change overnight; if the market price goes to $55 or to $45 you get a week of machine operation out of that barrel, same as you did when it was @ $50.
The intuition behind splitting off "wealth" from "value" is that you want some term that captures how useful something is for a particular non-market use (powering a machine); this term captures the notion that there is a kind of utility which is not very effected by the item's market price.
So usually when people make a distinction between "wealth" and "value" they're trying to differentiate between "what price something costs/fetches" and "how useful is it if actually used"; intuitively those are two different things but it becomes very hard to thoroughly disentangle them.
You see this notion re-invented many times, but not always with the same terminology; Warren Buffet likes to say that "price is what you pay; value is what you get", which is expressing something like the same distinction but using the term "price" for "value" and "value" for what I (and the original post) call "wealth"...the important thing isn't what you call things so much as that you can make the distinction.
The reason disentangling the notions is harder than it looks is that in any kind of market economy each is in effect dependent on the other in a kind of endlessly recursive fashion.
Explaining the endless recursion is an endless chore so I won't bother; you can get a hint of it if you think about the machine shop:
- a barrel of oil's intrinsic utility to the machine shop is that it lets the shop operate for a weak
- ...but why does the shop want to operate? It could be that this is a hobby shop and the operator just has an intrinsic love of working in it, but it's probably the case that the shop operates b/c the product of its operation has enough value that it's worth doing
- thus the barrel is intrinsically useful in that it lets the shop run, but the utility of running the shop has to do with value, and so forth
As for wealth-production leading to value-destruction, this is readily apparent if you look at any time technology's disrupted an industry.
A great historical example is the invention of refrigerators circa the 1900s and how it impacted the ice merchants of the time.
Before the invention of the refrigerator there was a large industry in the form of going to cold places, carving out giant chunks of ice, packing them in insulation (generally thick layers of straw), transporting them to warmer locations, and then selling them off piece-by-piece to anyone who needed to keep stuff cold.
After the invention of the refrigerator this ice-market evaporated, as you might expect; this wasn't b/c ice suddenly stopped working as a source of cold but b/c its relative utility compared to refrigeration plummeted...since money is scarce people allocate it towards what they think is the best available option and once you had refrigeration the ice-merchants were the best available option a lot less of the time.
You see something similar today: by any measure having substantial portions of the world's intellectual property available online for free is an enormous increase in the world's wealth -- the same as if every home having the entire library of alexandria in it -- but it also destroys a great deal of value, in that there's a lot less willingness to pay for the stuff that's easily findable online.
But even without disruptive technology there are often cases of increased wealth leading to value destruction; a common example is that in cities with effective mass-transit systems (most Japanese cities, most major cities in the Eurozone, NYC + other east-coast USA cities) there's a lot less demand for personal transit...having a solution to a problem (in this case: getting around) is a kind of wealth, and tends to reduce the value of other solutions to the same problem (private transit alternatives), b/c it's a solved problem.
"I'm pretty sure this is a comprehensive list. Can anyone think of anything I've left out?"
Seems like an overly confident statement that has low probability of being correct. Is this purposely to provoke people into trying to prove you wrong? If so, maybe it's genius, though dishonest.
Here's my shot:
The comments on the post also mention finance was left out. Well, if we take finance to be a combination of moving things and storing things, it sort of covers part of what's going on, but there's a missing key: lending things. Taking it in reverse, lending by itself wouldn't be enough either, since without moving things and storing things, you can't lend out anything you don't already have.
Anyways, I'm pretty sure I came up with an airtight metaphor for finance. Can anyone think of how the metaphor breaks down?
> Is this purposely to provoke people into trying to prove you wrong?
I wouldn't put such a negative spin on it. It's purposely to ask people if they can think of anything I've left out, i.e. to spark discussion.
I would actually put finance in category 9, mainly 9a and 9b. The whole point of finance is that you're dealing with money, not things. But money is an artificial construct (that's the whole point of money), so dealing with money means dealing with the rules that society has laid down to govern the behavior of money. Indeed, most of the actual activity in the financial industry is doing mathematical modeling (9a) drawing up legal documents (9b).
I guess you could argue that these are the only legitimate ways to make wealth or money. Technically, one can do high speed trading that essentially acts like computerized insider trading (and middle man economics). If someone provides no actual service, but still receives money, is that legitimate?
I don't think you could argue that. Finance encompasses a lot more than questionable trading practices. I said finance, and not say banking, since I meant any kind of banking and investing. And there is an equivalence between debt (loans, bonds) and equity ((yc,angel,VC) x investments, stock offerings) since from the perspective of the company, you are paying rents on capital in both cases.
Do I need to argue the importance of loans and efficient allocations of capital? If you don't like thinking about this with money, what about with loans of goods?
Brilliant! This should be required reading for everyone even thinking about going into politics or finance. Even economists seem to miss this one on an uncomfortably regular basis.