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Most of the economic conversations we end up having on Facebook are halted by the ongoing misconception that the only place where wealth is created is at the top, by large corporations, the very wealthy. This is untrue and it privileges capital over labor in ways you would not do if you looked around you rationally. I try to avoid using math on Facebook statuses, but this sort of dovetails with a college dissertation I did in an Econ math class. There are ways to really, programmatically, determine how much wealth is created by an entity. A lot of what people think of as wealth creation is really just wealth being moved around. This is one way.
In an economic community, wealth creation is really increasing the practical, observable willingness to pay more for something, more times, than before. So, there are lots of ways to do this.
You can say that x(R + L + M) = P(t) where R is the cost of resources (all of them) and L is the cost of labor time, M is the cost of managerial and oversight time, and P is the price at which people are willing to pay, right now, for what you are doing, multiplied across t, which is the incidence of purchase, it is a simple way of determining an increase in wealth (x) in a simple system. The math is less important than the idea,
There are a ton of ways to create wealth in a system like there are in business. Artists are near-perfect wealth creators since they are able to increase P and t with L and not much R. A furniture maker, for example, who builds high-end artisan furniture out of inexpensive resources, for example, would be a very good wealth creator. A company that had an idea to turn a resource into something far more desirable through minimal labor would be a fantastic wealth creator, too. If a writer is prolific enough and their books are desired enough, they are a near perfect wealth creator. Real wealth creation is about adding value to what exists so much so that people desire it and are more willing to pay for it. Computer programmers can create enormous wealth since the R part of the equation can be virtually nothing.
A government can create wealth in a number of ways, by subsidizing invention or creation, or even by lifting the floor to create more willingness to purchase within a system. Inventors are wealth creators. Those who can increase t by creating new instances of willingness to purchase are wealth creators. Even advertisers who can, by making brands more valuable, increase P or t, can create wealth.
We think of large companies as wealth creators because they generally can’t survive without increasing x. When they do that by decreasing what they pay for R or L (even as they increase what they pay for M), they may increase their own personal wealth while diminishing the wealth of the community. This is what people object to about the Amazon deal in NY, for example. No doubt Amazon was going to make money. But they were going to do it by getting a break on resources and hiring non-union workers whose cost of living would have to be subsidized elsewhere.
Another complexity is that, in a business, the point at which wealth is created is frequently in the L part of the formula. A company full of game developers inventing and making new games, for example, may see that the largest increase in value comes from the people working on the games, creating that value out of only increments of L. It’s easy to see how labor is frequently the superstar of wealth creation.
Companies that increase their own wealth at the expense of the community are rightfully considered parasites. Ones that increase their own wealth while adding wealth to the system are considered invaluable and vital.
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