I distinguish between Wealth and Value as concepts. Lots of things provide Value (a croissant, a free library app, refactoring code, project management), but Wealth is specifically things that provide ongoing value when used, without being used up. For example, a code base provides ongoing value to its owners, and a refactoring code base provides more ongoing value, so that increases Wealth. Living near a beach or other nice place is a form of Wealth. Money in the bank, or in stocks, that is generating enough income to outpace inflation is Wealth. Strong relationships is Wealth. Useful knowledge is Wealth.
In summary, Wealth is anything that generates (not “is convered to”) Value over time.
This has the consequence that in a time of no economic growth money is not wealth, which you may or may not be comfortable with. (I personally think money is a paradigmatic example of wealth, so that any definition of “wealth” that doesn’t cover money is ipso facto not a definition I’d want to adopt.)
Ah, I like that! I’m going to adopt that as the way I think about wealth. Thanks.
Do you know if that is some sort of agreed upon way of thinking about it, or just something you came up with and find useful? Not that there’s anything wrong with the latter.
I think there is a remaining question about whether value is wanting or liking. If you have access to Facebook it gives you the ability to doomscroll any time you have can use a web browser. You want to doomscroll but you don’t actually like it. So is the access to Facebook wealth? I guess we need two different terms, one to address wanting and the other to address liking.
Lots of things provide Value (a croissant, a free library app, refactoring code, project management)
I don’t see refactored code or a project manager on staff as providing value. I see value as the thing the end user experiences, like the ability to pay their credit card online. But it makes sense to me to consider the refactored code and PM on staff as adding wealth. Each generates value over time. And I like how this addresses my question about indirect/distal causes of value to end users: it doesn’t matter that it’s indirect, it still helps to generate value over time.
if the code base for Google Search represents wealth, but is itself a critical component of Google-the-company’s success, then doesn’t that mean that for any financial instrument based on Google (i.e. Google stock, bonds issued by Google), to consider it also a form of wealth would be to double count that code base?
i’m skeptical that money can be both a claim on wealth and also a form of wealth. it seems like it should be strictly one or the other, else you end up with a bank owning a bank owning a bank owning … with each additional layer of ownership somehow resulting in more wealth, and that seems questionable to me.
Let us introduce a third vocabulary word: Asset. An Asset is something that is consumed to provide Value, like cash in a mattress, food in a refrigerator, or the portion of a house or car that is depreciating as it is used.
One of the miracles of the modern age is the ability of banks to turn Assets into Wealth many times over. It’s a bit of technology built on societal trust.
In the stock market example, it isn’t double-counting, just different perspectives. Stock shares are a claim on the company, so the Google code is included in the Wealth of Google, and stock ownership is counted in the Wealth of the individual owners, but it’s like saying “there are 20 legs in my dining room, and there are 4 legs on the table”—it’s an error of logic to add the 20 to the 4.
I distinguish between Wealth and Value as concepts. Lots of things provide Value (a croissant, a free library app, refactoring code, project management), but Wealth is specifically things that provide ongoing value when used, without being used up. For example, a code base provides ongoing value to its owners, and a refactoring code base provides more ongoing value, so that increases Wealth. Living near a beach or other nice place is a form of Wealth. Money in the bank, or in stocks, that is generating enough income to outpace inflation is Wealth. Strong relationships is Wealth. Useful knowledge is Wealth. In summary, Wealth is anything that generates (not “is convered to”) Value over time.
This has the consequence that in a time of no economic growth money is not wealth, which you may or may not be comfortable with. (I personally think money is a paradigmatic example of wealth, so that any definition of “wealth” that doesn’t cover money is ipso facto not a definition I’d want to adopt.)
Ah, I like that! I’m going to adopt that as the way I think about wealth. Thanks.
Do you know if that is some sort of agreed upon way of thinking about it, or just something you came up with and find useful? Not that there’s anything wrong with the latter.
I think there is a remaining question about whether value is wanting or liking. If you have access to Facebook it gives you the ability to doomscroll any time you have can use a web browser. You want to doomscroll but you don’t actually like it. So is the access to Facebook wealth? I guess we need two different terms, one to address wanting and the other to address liking.
I don’t see refactored code or a project manager on staff as providing value. I see value as the thing the end user experiences, like the ability to pay their credit card online. But it makes sense to me to consider the refactored code and PM on staff as adding wealth. Each generates value over time. And I like how this addresses my question about indirect/distal causes of value to end users: it doesn’t matter that it’s indirect, it still helps to generate value over time.
if the code base for Google Search represents wealth, but is itself a critical component of Google-the-company’s success, then doesn’t that mean that for any financial instrument based on Google (i.e. Google stock, bonds issued by Google), to consider it also a form of wealth would be to double count that code base?
i’m skeptical that money can be both a claim on wealth and also a form of wealth. it seems like it should be strictly one or the other, else you end up with a bank owning a bank owning a bank owning … with each additional layer of ownership somehow resulting in more wealth, and that seems questionable to me.
Let us introduce a third vocabulary word: Asset. An Asset is something that is consumed to provide Value, like cash in a mattress, food in a refrigerator, or the portion of a house or car that is depreciating as it is used. One of the miracles of the modern age is the ability of banks to turn Assets into Wealth many times over. It’s a bit of technology built on societal trust. In the stock market example, it isn’t double-counting, just different perspectives. Stock shares are a claim on the company, so the Google code is included in the Wealth of Google, and stock ownership is counted in the Wealth of the individual owners, but it’s like saying “there are 20 legs in my dining room, and there are 4 legs on the table”—it’s an error of logic to add the 20 to the 4.