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“Why not co-opt the concept?” Because it requires your audience to invest time to understand issues, and they don’t want to do that. I don’t think you can win that PR battle, the forces opposing a direct employment bill will spend more to twist it into a debate on socialism, deficits, and higher taxes.

“shutting down less profitable lines” has always been an issue, as it is subsidized by the tax laws. If corporations were able to immediately deduct the cost of capital investments (like a factory), they would lose much of their incentive for shutting down a marginally profitable plant years later, as they couldn’t write it down again. Let them take the deduction at the time of the investment, rather than amortize it over many years, and there’s no incentive to shut it down, and create an after-tax profit because they have a paper loss on the write down.

If we effectively penalize the accumulation of profits, and reward the reinvestment or distribution of them instead, we will see more jobs created, or at least profits will get taxed and then the government can invest them. But you’ve heard me say this before.

The people who strive to make the world a better place, putting that goal on par with their earnings. Some of them are entrepreneurs. Some of them are government employees. Spans the gamut.

I agree with you that we should challenge the self-serving claims of those who SAY they are wealth-creators. But this doesn’t invalidate the concept, simply their right to own it.

“I suggest we don’t go down the route of discussing wealth creation when trying to transform society. It’s a dead end.”

Why not co-opt the concept? A direct-employment bill could easily be described as “wealth creation”. You are taking unemployed people, underutilized resources, and employing them to create wealth. Doesn’t that sound a whole lot better than “pork barrel spending”? Of course, you would then need to answer questions about the value of the wealth created. And challenges that there might be other ways to spend the money to create greater value. But wouldn’t those be good conversations to have?

“If they emphasized the top line by expanding their product or service offerings, I think that would be great – you know, like recycling profits to grow business.”

We could use some of that in this economy, yet I’m seeing trends in the opposite direction (pushing margins over volume, shutting down less-profitable lines).

Just a thought — I don’t know if that is THE answer or even part of one.

Well, yeah, but that doesn’t stop most people from doing it. Look, I’m with you, but when the public debate turns to the creation of wealth, they’re not using your yardstick. They use valuations of publicly traded companies and real estate. So I suggest we don’t go down the route of discussing wealth creation when trying to transform society. It’s a dead end.

You think we should lionize wealth creators? Like who? Guys running private equity firms that “create wealth” by borrowing money to buy profitable companies, and then load them down with debt to pay off their loans, and extract wealth for themselves? Guys like Donald Trump? I’m guessing you mean people who start new businesses that grow and create jobs, but those are not the people clamoring for tax breaks, waving the “I am a wealth creator” flag.

Sure, not all obsolete technology is useless, but the value of it has declined, and it will eventually be useless. Six year old computers are still very useful, but not 20-year old ones.

To your last question: I think it would be a mixed bag. A lot of companies chase revenue just for market share, and it doesn’t make the company stronger, but it does reduce costs for the customers. If they emphasized the top line by expanding their product or service offerings, I think that would be great – you know, like recycling profits to grow business.

As for gold? The only thing sillier than pretending that paper is worth something is pretending that a certain comparatively useless metal is worth something. If I had a million dollars, converted into gold at the current prices, it would form a very shiny (and heavy) cube roughly 4 inches on a side. I could put that cube in front of me and cackle, “I’m rich! Rich like Midas! Rich, rich, rich!!!” Then after a while I would get hungry, and would start searching for somebody willing to trade me a hamburger for that four-inch cube.

Obsolete technology isn’t necessarily useless. One of my jobs at school is to recycle used technology into serviceable learning tools. Other institutions have been very generous with their six-year old “obsolete” technology, from which we tease another 4-6 years of life.

That said, most wealth is immediately consumed (and nothing lasts forever). Our infrastructure and capital goods may have a useful lifetime measured in decades, but without continued investment they depreciate. The key to societal wealth is to increase the supply of capital goods (including education) faster than they depreciate, and to utilize existing capital goods to the greatest effect.

Shouldn’t we lionize “wealth creators”? There will always be some who create more wealth than they consume, which allows other to consume more than they create. We lionize the great teacher for making her students lives brighter. We lionize the innovative businessman for employing thousands and enriching the lives of millions. We lionize Snookie for …um… well, I’m sure there must be SOME good reason for that.

Never confuse money with wealth. Never confuse the accumulation of hoarded money with wealth created. Certainly don’t confuse “price” and “value”, whether talking about consumables or assets.

The real estate bubble destroyed wealth, damaged wealth creation, by greatly expanding loan volume and mortgage interest (money flowing OUT of household pockets into the bank coffers) and by sucking talent away from more productive occupations. (How many Wall Street bankers does it take to change a lightbulb? Wall Street bankers don’t change lightbulbs. They wait for somebody else to change the lightbulb and swing a profit on the trade.)

I’ve been wondering: What would our economy look like if companies gave greater emphasis to the top line than to the bottom line? (Not to the exclusion of profits, but perhaps shifting the balance between the two?)

“national wealth depends solely on the work accomplished, NOT on the wages received for that work”. I agree with that, but that is not what other people mean when they talk about the creation of wealth.

The fact that people live better today than in 1500 is not a measure of wealth, but of how humans have adapted to our environment, i.e., the technology we have created. If you want to include the impact of technology on money, technology also destroys value; the cell phone sitting next to me that costs $500 destroyed the value of computers thousands of times its size and cost, When new technology is created (work + elements extracted from the earth), other technological creations are obsoleted. We’re just constantly adapting to our environment, and the sum total of all value constantly gets redistributed whether people like it or not, but it doesn’t really increase a whole lot.

Do you really think that the total wealth per capita in the world today is no different than it was in 1500? A family living below the poverty line in the US today is wealthier than the nobility from 1500 in every way that matters. Quality of food, housing, medical care, entertainment, transportation, education…

Obviously this is an extreme example, but I see people glorifying the 1950s and believing it! The technological innovation and increased productivity since 1950, since 1980, has been immense. We can be better off today, even if our bank accounts aren’t any larger. Imagine what you would have been willing to pay in 1980 for the opportunity and convenience of the Internet, or a Prius, or an iPad, or (especially) access to modern medical care? Turning that around, your middle-class lifestyle from 1980 could be funded today for around $30k for a family of four.

Even if you meant to exclude technological innovation, your statement is still wrong. We create wealth every time we do something useful. We destroy wealth (and more than a few brain cells) every time we waste an hour watching “Reality TV”. You want more wealth? Put people to work doing something useful!!!!

If unemployment/underemployment today is around 20%, then we could increase our national wealth substantially simply by putting these people to work. I know I’ve said it before, but the national wealth depends solely on the work accomplished, NOT on the wages received for that work. If you perform a useful job, then SOMEBODY is richer. You and I both believe that the produce should be shared more freely, but please don’t say the creation of wealth is a zero-sum game. That is very wrong, and has serious negative implications.

Sure. Why don’t we try the John Edwards plan? Or make it even bigger? Let’s double the EITC, give absolutely everyone Section 8 vouchers and food stamps at $2,000 a month.

That would, I think we’d all agree, alleviate quite a lot of poverty.

However, it wouldn’t change the number defined as in poverty above by one single person, adult or child. Because what that number is is the number of people in poverty *before* we try to alleviate poverty.

I know I’ve said this here before but it’s still darn true. US poverty numbers don’t include the things we do to alleviate poverty. You just cannot use them in hte way Felix has just done.

Currency is an artificial quantity of measurement, and to make it even less clearly measurable, its value is relative to other things, and always changing. It is not static and absolute like a unit of time or mass. So when you say people get richer when the stock market goes up, it is only relative to those who haven’t bought the stocks.

you may not be defending inequality, but you said when it increases it doesn’t hurt the economy, but it does. Poverty and limited social mobility are symptoms and manifestations of rising inequality.

I think the most important thing you are overlooking is that the economy and the financial markets are (mostly) not a zero-sum game. When the stock market goes up, a lot of people get technically richer with money that didn’t exist before. It’s not that it was taken “from” the 99% or made “at the expense” of the 99%. Not at all. That explains (most of) the recent big spikes you see in the incomes of the Top 1% in 2005-2007. They are (mostly) financial (or “paper”) gains. If OWS were to use the latest data on those charts, it would show that in 2008 and 2009 the income of the Top 1% fell down sharply, for the same reason: financial losses. Did the Top 1% lose this income for the benefit of the 99%? Alas, they didn’t. At least I didn’t get any checks. So, non-zero. Try it.

In any case, I don’t “defend” inequality, and I’d love to see more financial regulation on leverage, proprietary trading and securitization, etc. I’m just saying that my list of public policy priorities goes like this:

1. Poverty
2. Social Mobility
3. Inequality

This is, for me, a reality-based roadmap for prosperity. In recent years, Democrats have been making fun (and rightly so) of the looney and and religious and non-scientific ways in which some Republicans defended their ideas. When I read the 99% literature, I sometimes feel the same way. I feel I’m being preached at.

When income is hoarded, the economy suffers. The economy is completely dependent on money passing from one person to another, and when that slows down, the economy shrinks.

Saying rising inequality is bad for the economy is not equivalent to saying equality is good, in fact, if everyone in a market-driven economy earned the same amount, progress would slow down. But that doesn’t mean that we should embrace, or even accept, a society where an increasingly larger share of income is absorbed by a smaller segment of the population. That will be fatal, irregardless of what Krugman says.