Michael Battalio

Friday, November 29, 2013

Serious conversations (part 53):

        This series is a continuation of my conversations with an atheist friend of mine. These are my edited responses from that conversation. The fifty-third and fifty-fourth entries begin a discussion on wealth.

        This set of discussions start what will hopefully be a lengthy conversation on wealth, including its generation, destruction, and use. These first two entries consist of a broad overview of what we think. Later we will begin a survey of “The Origin of Wealth” by Eric D. Beinhocker.

Where does monetary wealth come from?  If it's true that the only way to make money (or break even) is to export goods or services to the outside, how can that be sustained in a closed system?  If your city is making a profit, does that mean that somewhere, some other city is losing money?

Are natural resources necessarily the ultimate origin of all wealth?  Even if your city is a service economy and you export services to other cities, the people who provide those services have to be fed and clothed, so you have to import goods to take care of that.  You're just farther up the economic food chain.  Somewhere down at the bottom is a farmer and a miner.

So maybe we should take a step back and define wealth first of all.  For that I go back to Adam Smith and "The Wealth of Nations" where wealth is the produce of the people and land, and produce is something that satisfies a human need where I would refer us to the classical Maslow hierarchy of needs to define human need.  Now having said that I think it's clear that in a closed system wealth can be generated because the Earth is a closed system at the moment.  The continued growth of planetary wealth is a result of the further exploitation of the natural resources of the Earth.  We are creating wealth by taking it from the ground and using human labor to facilitate the taking.  So at its most basic, the generation of wealth requires two things: time and effort.  We extract material from the earth and then with effort create some good that has some monetary value.  Wealth is thus not just created from nothing or taken from someone else; it is generated through work.  

        I, then, disagree that wealth only comes from export.  Consider those very isolated tribes of people that live apart from the globalized economy (wikipedia has an article on them "Uncontacted peoples").  It seems a group is discovered every so often. When they have first contact with the globalized economy they have wealth, not very much, but they have it in their clothing, tools and domiciles.  That wealth was generated independently.  It can certainly be the case that cities can exploit other cities to generate additional wealth, but I don't think it is a necessary condition that wealth can only be generated though the taking from others.  

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