Here's something I posted just a tad over a year ago on this blog. It has crossed my mind recently again due to some things that prompted thoughts about poor people in certain countries. I'm not going to comment on this past piece of writing or on new thoughts quite yet. I'll save that for a subsequent entry.
OLD POSTING:
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I'm not quite sure why I've been thinking about this lately, but my mind wanders, and I tend to analyze different things. There are probably many assertions here that can be disproven or much data I lack, but here are my thoughts at this point.
I've been thinking about wealth...the creation, the redistribution, and who ultimately gains.
Source of Wealth
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Is wealth truly a zero-sum game (i.e., for someone to make $1 someone else must lose $1...in other words the wealth pie is a fixed size and that people merely lose or gain part of that pie to someone else)? In some instances I would say it is true transference from one person to another. Yet in this world, I would say that sources of wealth can be increased by the world and universe itself. Let's take an example of each.
For the true transference, we need look no farther than the recent tech boom and bust. In the aftermath, most people say that lots of wealth was destroyed and people lost a ton of money. That is true for the majority of people, but in the end, there was mainly a redistribution of money. The few early investors in these companies and early employees were able to cash out some millions (or billions) at the expense of many of the smaller investors.
It's not a pyramid scheme, but it can help paint the picture. Many of the late smaller investors trying to cash in on the hysteria are at the bottom funding the people who are at the top. Ultimately the pyramid crumbles with the top percentage crushing those below them.
Now onto the other example: how does the world and universe create wealth? This really comes down to natural resources. You could say in some sense that we are still working with a fixed pie-size. There is a certain amount of oil, the sun has only so much energy, etc. Yet, a lot of this wealth is potential wealth which is not yet realized by humans.
So, there is the world pie which can increase the size of the human-wealth pie (hope this isn't getting too confusing). In other words, when someone discovers new oil, the amount of human wealth goes up. Or, when the sun's energy produces new food crops or solar energy, likewise human wealth is created.
What it All Means
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I'm still processing what this all means to me. Ultimately, I have seen that once you have money, it is much easier to make money. The people who made a fortune in the tech boom still have a ton of money. They can take on more risk to fund the next boom and make even more money.
What is the responsibility of these ultra wealthy people? To horde all their money? Are they obligated to redistribute the pie to others in the world? Most people would say yes, let those millionaires and billionaires redistribute. But let's look at the average wealth of an American which is better than the world's average wealth. How would you like to give some of you money right now to even out the world's wealth?
Then I start thinking also about the countries that are up and coming such as China. The standard of living and wealth in the country is rising more rapidly than many other nations. Where is this wealth coming from? A lot, I'm sure, is from other countries pouring in their money.
For example, take some out of the US. Cut jobs and outsource. The salaries going to the US workers are now granted to foreign workers. This is a whole different tangent which I won't get into deeply now, but I'm not opposed to outsourcing although sometimes I question the effectiveness of at least certain types of outsourcing. Funny how anger can be misdirected too as ultimate outsourcing decisions for US companies are mainly US executives. Anyhow, back to the topic at hand...
On a practical and personal level then, it is good to also think about where is the wealth being redistributed to next. By personally investing in those areas, even the small individual can prosper (although once again, it is more often a redistribution).
Another example, in the early tech boom, people who realized that the Internet will take off could invest in early. By the time it was close to crashing, the last few investors who jumped on board were too late. The people who realized the movement early, took on the early risk, and got out prospered. This translates to any field. Are we feeling the same thing in the real estate boom now? What's the next big market?
Anyhow, those are my thoughts for now. Thinking about how the world works really intrigues me.
