Jim Hlavac
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Economic Theory
| Economic Theory |
Wealth is not just money. Nor is it the sum total of goods and
services. Wealth mostly cannot be quantified because wealth is
dependent on valuation. And only individuals value things, and each
does so differently. At best the sum total of goods, services and
money is a fraction of wealth. Wealth is also in things like the
perceived quality of life, in the opportunities to do things and obtain
things. Wealth resides in a perception. Many poor people will tell
you they feel wealthy, because they have all they want.
This because wealth comes in two distinct forms: one is the
traditional sense of counting up an absolute number of what you have
and saying "see, I have a $1000 in wealth." But wealth is also all that
intangible perception that we agree exists. And that agreement is
mostly expressed in terms of the "good will" a company might have on
its balance sheet. This corporate good will is akin to the reputation
each individual has. This reputation is part of a person's wealth,
because it has a directly bearing on credit worthiness.
When considering wealth one must take into account the level of
freedom to enjoy the physical wealth one has. But also the level of
freedom to obtain more. Your credit is part of your wealth. You
ability or opportunity to gain more physical wealth is part of your
wealth.
Consider this: are you wealthy if you have a $1000 but there is no
ability to buy anything because the government prohibits economic
activities? Sure you have physical wealth in the form of money in
certain denominations -- but of what use is the wealth if you don't
have anywhere to spend it? It is in fact worthless. And something
that is worthless can not be wealth.
services. Wealth mostly cannot be quantified because wealth is
dependent on valuation. And only individuals value things, and each
does so differently. At best the sum total of goods, services and
money is a fraction of wealth. Wealth is also in things like the
perceived quality of life, in the opportunities to do things and obtain
things. Wealth resides in a perception. Many poor people will tell
you they feel wealthy, because they have all they want.
This because wealth comes in two distinct forms: one is the
traditional sense of counting up an absolute number of what you have
and saying "see, I have a $1000 in wealth." But wealth is also all that
intangible perception that we agree exists. And that agreement is
mostly expressed in terms of the "good will" a company might have on
its balance sheet. This corporate good will is akin to the reputation
each individual has. This reputation is part of a person's wealth,
because it has a directly bearing on credit worthiness.
When considering wealth one must take into account the level of
freedom to enjoy the physical wealth one has. But also the level of
freedom to obtain more. Your credit is part of your wealth. You
ability or opportunity to gain more physical wealth is part of your
wealth.
Consider this: are you wealthy if you have a $1000 but there is no
ability to buy anything because the government prohibits economic
activities? Sure you have physical wealth in the form of money in
certain denominations -- but of what use is the wealth if you don't
have anywhere to spend it? It is in fact worthless. And something
that is worthless can not be wealth.