Hot answers tagged

4

No, the idea of wealth as something to be created did not originate in the United States. It was part of the mercantilist approach to national economic policy that was widely adopted in Europe in the 16th to 18th centuries. Mercantilism involved a range of policies, many of which were designed to increase the wealth of one country at the expense of others ...


4

Robot taxation is a bit like corporate income taxation. Like corporations, robots don't pay taxes, people pay taxes. In the words of Herb Stein: I remember that in addressing the issue in the 1980s, the late Herb Stein said that it's as if people think that if the government imposed a tax on cows, the tax would be paid by the cows. Are Taxes on ...


4

Globally, there is Lakner and Milanovik (2015)'s elephant graph: Hellebrandt and Mauro (2015) Thus, the two previous distributions look like bimodal log-normal distributions. or CDFs, as in MacAskill's book Doing Good Better Did not find something strictly related to wages. For most of people, income may be a good proxy of wages.


3

Equity capital = Assets − Liabilities. Market capitalization = Number of shares outstanding × Current share price.


3

I think that you are more or less than correct in thinking that cash that is never spent (nor expected to be) may as well not exist. Thought experiment: suppose that, unbeknownst to you and everyone else, £1 million suddenly appears under your mattress. If you never discover the money, it is hard to see how it could change anything in a meaningful way. ...


3

First we need to discuss what wealth is. Is it just the amassment of valubles? In the 16th-18th century, rulers thought so. This notion is called mercantilism. This idea was rejected by Adam Smith in book IV of The Wealth of Nations. The current meaning of wealth is not the amount you own, but rather how much you can consume (sustainably). Formally, the ...


3

While the owners of a successful business will generally experience an exponential growth compared to their employees, there are some factors to consider: I find it unrealistic for any business to maintain a growth rate of 100% over many years. (As per the example) You can only sell twice as much if you can find twice as many buyers. As a business grows, it ...


3

Scrooge McDuck likes swimming in money, which is why he accumulates a lot of it without any intention of ever spending it. If you think bringing in Scrooge McDuck is far-fetched and irrelevant, you are right. People do not generally accumulate wealth with no intention of ever spending it. But suppose there were such people and, to make things concrete, ...


2

First, let us make a distinction between the functional distribution of income, related to how payment goes to factors of production, i.e, labour and capital, via wages and rents, and the personal distribution of income, which refers to how such factor payments are distributed across individuals or households. After commenting about this, we can start to ...


2

Re: "You could say this is 'creating' money" - no you couldn't. This would be conflating money and wealth. Wealth can be created without new money being created - indeed wealth was created before money even existed. Conversely money can be created without creating wealth. So they are entirely separate things. A crude analogy: wealth is to money as apples are ...


2

The reference is World Bank (2006). You can see the detail of the methodology in Appendix 1, and their estimates of intangible wealth in Appendix 2. There are other methodologies to measure intangible wealth (e.g. here and here). Alternatively, there are many ways to compute natural and physical capital, which will give different results to the one given ...


2

The gold will be free. (price 0 not anymore rare). banks and others institutions will found others stuff for having reserve. ( platinum, silver, grains, maybe one day water ).


2

Too much inequality is probably still bad even in a simple model. Too much equality is probably not good either. A balance has to be found. Let's say every enterprise consisting of production of goods/services, middlemen, etc. distributes 99% of its profits to that one individual. Then the consumer is paying a price that reflects that and its effectively ...


2

It is "stupid" only to the extent that it doesn't take into account the socio-economic and political realities. It appears the government tries to make the plan acceptable by giving to everybody, rich and poor, the same nominal amount of money. So it seems this is not "in favor of the poor against the rich" so why would the rich people react against it? ...


2

The main problem is that wealth does not equal cash. Those ten rich people probably have most of their wealth in real estate and stocks. Imagine all you own is a Lamborghini, then the government prints a lot of money, does that impact you? Depending on the situation the money printing may be progressive or regressive. And the cost are high: There will not ...


2

I do not believe that your suggested definitions will hold up. Since this is a forum for questions about economics, I do not see the point of proposing a new definition here. Who is going to see it? What you call “income generating wealth” is captured by “wealth” in its standard usages. However, what you exclude (such as bank deposits) will be included in “...


2

Both distributions are often modelled log-normal, with a substantial number of zeros. A pareto distribution is also sometimes used (Piketty & Saez (2012), p.32) for modelling the distribution of top incomes. Wealth distributions are also in general far more skewed than wage (or income) distributions.


2

The total assets of all US commercial banks are about \$17.2 trillion. You'll have to be clearer about what you mean by "their own money". The total equity capital of US commercial banks is about \$1.9 trillion.


2

This statistic shows the Gini coefficient, an index for measuring income distribution, for U.S. households from 1990 to 2016. A Gini coefficient of zero expresses perfect equality, where all would have the same income,a Gini coefficient of one expresses maximal inequality among values. In 2016, the Gini coefficient for household income was 0,48. ...


2

This depends on the exact preferences, but usually the utility function $$ U(x,y) = v(x) + y $$ is such that $$ \lim_{x \to 0} |MRS(x,y)| = \lim_{x \to 0} \frac{\text{d}v(x)}{\text{d} x} = \infty. $$ In this case it is the consumption of an additional marginal unit of the nonlinear good $x$ that is infinitely useful compared to the consumption of an ...


2

(Mostly) ignore money for this growth issue; it's by and large a red herring that's distracting you. Instead just think of technological progress for instance. Assume everyone is washing their clothes by hand. That takes a fair bit of time. Now someone invents a washing machine. Everyone (who can get a washing machine) will then have more time on their ...


2

I think the big unknown here is how much they'll start to dissimulate and/or offshore their (new) wealth. According to one paper: A recent study by Brülhart et al. (2017) gives support to the plausible assumption that the effect of net wealth taxes on reported wealth is the more pronounced the more integrated the regions involved are. According to ...


1

Onurcanbektas, I really like your thought process. The problem with your mental model is that you've assumed economic output is exogenous. However, in the real world (most) jobs produce economic output. This output then increases the size of the pie, allowing people to be, on average, richer. However, from a societal perspective, I believe we will ...


1

American economic theorist Henry George wrote about precisely this issue in his famous work Progress and Poverty published in the late 1800s, and based on his observations on the economic development of San Francisco during the gold rush. His argument was that increasing economic development primarily benefitted landowners, at the expense of both capital ...


1

The distinction between the two is not well specified. If I own an apartment I can rent it out or I can live in it. If I own an art collection I can hang it in my house or charge others to see it. Cash in bank accounts is lent out by banks to form investments in other firms and projects. Land might be used for long walks or used for farming, natural resource ...


1

If we view "wealth" as the subjective experience of pleasure, then "wealth" can spring up ex nihilo: if people used to get two dollars' worth of pleasure from having a cup, but now they get ten dollars' worth, then in some sense eight dollars of wealth has come "out of nowhere". However, it's more likely that at least one party has misvalued the cup. ...


1

Even if $u^b$ is finite, it can never be achieved. This is what is meant by "does not attain a maximum". Rather, $u(x)$ approaches $u^b$ from below as $x \to \infty$. This is because $u$ is strictly increasing. If we had $u(x_*) = u^b$ for some $x_*$, then we would have $u(x_* + 1) > u^b$ and $u^b$ could not be a bound. This is why $U$ is written as the ...


1

Inflation should increase wages in the long run. Wages are the price for labor and all prices increase with inflation. However, in practice wages tend to stay flat despite inflation for a variety of reasons. Menu costs- it might take time to rework all existing wages. Some wages are locked into long term contracts. Wages, once increased, are difficult to ...


1

Should mean wages increase with inflation? If not, why? No. Inflation is not the only factor that determines wages. Inflation has to do with the nominal value of wages, but these also entail components pertaining to the real value of work. Here are three examples that tend to push mean wages down, (1) technology, to the extent that it replaces human labor;...


1

Trickle-down economics are widely criticized and many believe that it doesn't work. Asher Edelmanon explains brilliantly in the first 2min of this video (or in the written version here). The basic logic is that, in practice, doing this only leads to a higher accumulation of wealth by the wealthy.


Only top voted, non community-wiki answers of a minimum length are eligible