Tacoma Narrows Bridge
Posted on 07/29/2002 7:41:35 PM PDT by Enemy Of The State
Engraving raw material (the revolver) transforms the material to a different state that has higher value in the market.
It is an example of a value-added activity that creates wealth.
(note: it doesn't "add wealth", it "creates wealth" by adding value.)
It is not a service.
Wrong. Services have value, they simply do not add value.
Services engage in wealth transference, which at times may be of significant quantity.
They do not, however, create wealth.
You guessed wrong.
There aren't any that do.
Actually, dumping large amounts of US government debt has been suggested by some Chinese military strategists as one "asymetrical warfare" tactic to use in the coming Sino-American War. Doing so could drive up US interest rates dramatically. Leveraged financial speculators (i.e. most major banks) who sell Treasuries short and invest the proceeds in higher yielding securities would be crushed, toppling our whole financial system.
Then why did Mexico want the maquilas and China wants them now? Why don't they just do services?
If the Chinese dump their treasuries the lower prices would give the banks and speculators an easy opportunity to cover their short positions and make a large profit.
Big ticket items, homes, cars, durable goods, machinery, etc. etc. eventually fall into disrepair or otherwise deteriorate to the point they no longer have market value.
Consumer goods have appreciably lower economic life spans.
Perishable goods (food) and disposable items dissipate wealth most rapidly.
Of course, I'm explaining this in terms of personal items that constitute most people's personal wealth. But the same principle holds true for large items owned by businesses and/or government: Buildings, machinery, roads, bridges, etc. etc. etc all eventually degrade (both physically and in value)-- and wealth is dissipated.
It's nice to come across somebody who understands. ;^)
It gets boring trying to educate the usual bunch of naysayers.
Wealth is not dissipated and you are talking about depreciation and durable (5+ year) goods. Any sound investor that buys property had better take the time, energy and money to maintain the structures that they purchase.
BTW .... name an example of a road, or a bridge that has actually lost value.
Real estate is one of the few things that almost always appreciates in value.
What is value? What is wealth? The answer is simple. You are wealthy when you have something that others want. By distributing and disseminating knoweldge you can create value. Manufactured are just as subject to the laws of supply and demand as intellectual property, and have no more intrinsic value, though their value may be less volatile.
Yes, the answers are simple.
VALUE: Quite simply, this is the amount of consumer satisfaction directly or indirectly obtained from a good. service, or resource. The more a good satisfies a person's want or need, then the more valuable it is to that person. Furthermore, different people are likely to place different values on a good. Resources are valuable to the degree that they are used to produce stuff that consumers want. The bottom line is that value, like beauty, is truly in the eye of the beholder.
WEALTH: The net ownership of material possessions and productive resources. In other words, the difference between physical and financial assets that you own and the liabilities that you owe. Wealth includes all of the tangible consumer stuff that you possess, like cars, houses, clothes, jewelry, etc.; any financial assets, like stocks, bonds, bank accounts, that you lay claim to; and your ownership of resources, including labor, capital, and natural resources. Of course, you must deduct any debts you owe.
By distributing and disseminating knoweldge you can create value.
Well I agree that "information" can be distributed and disseminated, but not knowledge. In any event, while information may alter value perception in the marketplace, it does not "add value" to the product. It does not create wealth.
Sure, that doesn't mean that manufacturing is good and services are bad.
Big ticket items, homes, cars, durable goods, machinery, etc. etc. eventually fall into disrepair or otherwise deteriorate to the point they no longer have market value. Consumer goods have appreciably lower economic life spans. Perishable goods (food) and disposable items dissipate wealth most rapidly.
Of course, I'm explaining this in terms of personal items that constitute most people's personal wealth. But the same principle holds true for large items owned by businesses and/or government: Buildings, machinery, roads, bridges, etc. etc. etc all eventually degrade (both physically and in value)-- and wealth is dissipated.
So, regardless of whether we're talkin about services or manufactured goods, eventually all wealth is dissipated? Sounds like our standard of living should be continually dropping. It's not so there must be something happening that you're not explaining.
Exposed film in a can is even more useless than unexposed film in a can unless their is artistic merit in the exposure. Artistic merit is a service and not a tangible good. I can expose film in a can by taking unexposed film and opening the can. Hollywood is mostly a service industry.
Yes, which is why it is important for an economy to continuously engage in wealth-creating, value-added activities. If these activities exceed the dissipation rate, overall wealth increases. If they do not, overall wealth declines.
Sounds like our standard of living should be continually dropping. It's not so there must be something happening that you're not explaining.
We are in a phase where the illusion of wealth is being propped up through the use of debt. That is the topic of this article. The Trade Deficit is an indicator of how we acquire short-economic-lived consumer goods to maintain this illusion. That deficit returns to haunt us as China purchases our government debt obligations. In the long haul, America will have squandered its wealth and will be obliged to pay taxes simply to pay interest on the debt owed to China, and in turn, receive less government services for the tax dollars we pay.
This situtation is NOT in America's best interests.
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