Question by Marcello: How is wealth created?
I am curious as to how everyone views the following:
How do you define wealth?
Where do you feel that wealth comes from?
Do you think wealth is finite or infinite?
With all do respect, some of the answers seem pretty limited. Work = Wealth? Maybe, but there are countless other means. The question was how to create wealth, not how one amasses wealth.
If you are defining wealth (individually and globally) as as some variation of net worth, or better yet stored value that can be converted into monetary/barter value, then you have to consider that merely building individual wealth doesn’t mean wealth is being created. If I make a fortune in small business by selling products, then essentially I am taking a little bit of wealth from all my customers. If I labor all day long and get paid for my work, someone gave some of their wealth in exchange for the work, so wealth was merely transfered.
In effect, these are only examples of transferring wealth from one entity to another other.
Wealth is CREATED with ideas.
For example, if I show a company how to operate more efficiently and save them $ 10 million merely by adjusting their system of operation (not affecting incoming and outgoing costs/sales) then in effect I have created $ 10 million in new wealth. This happens all the time in business. They may pay me $ 1 million as a resulting consulting fee and therefore I have created $ 1 million in wealth for myself without taking any from anyone else.
Consider the original use of the assembly line. This made the prices of developing products far more efficiently, and added value to society with cheaper prices, more job opportunities, and many more products available. ideas that create efficiency create wealth, and ideas are unlimited. Thus, wealth is unlimited in that there is no shortage of ideas. Evolution historically is society becoming more and more efficient, which is evidence that with time, there is no end to how much wealth will be created.
The division of labor might be the greatest wealth creator in history. If you consider the impact of the division of labor, and how much more efficient life is around the world on average as a result of the division of labor, you cannot dismiss how powerful that change has been.
When I go to the grocery store and can instantly buy all the ingredients I want for pretty well any meal I can conceive of, I am always amazed at the thought of all the work this would take prior to the division of labor to accomplish this same task.
Consider just producing eggs and bacon…it would take the average person (not farmer I suppose) all week just to figure out how to even get the ingredients, when it takes the equivalent of about 30 minutes of minimum pay work to merely drum up the cost for the same ingredients. That is powerful, and whether you are rich or poor, everyone all benefits immensely from this.
As for those that view wealth as just a giant piece of cake divided among the people, I think those people overlook the fact that that cake can be grown in size as well. If no one ever st rived to make thins more efficient, then indeed, wealth would be finite, but human nature is to find better ways to do just about everything (which is the beauty of free markets) that there is no way that giant cake will ever remain one size. The example describing India’s issue with population illustrates that very well; essentially that they need to focus more on increasing the size of their total cake so to speak, as oppose to worrying about their massive population splitting up the wealth. Well put…even if it was merely a cut and paste of someone else’s work : )
Answer by vixi_styx
depends on your view of wealth. personally i would rather be wealthy spiritually speaking than of material wealth.
What do you think? Answer below!