- Joseph Nemeth
- Fort Collins, CO
- United States
What does the term "wealth creation" mean?
Consider twenty college students living in a large house. We'll make this easy: they have unlimited free electricity, can order free pizza to eat and free beer to drink, and their toilets work and cost nothing. However, they have no other contact whatsoever with the outside world, and cannot leave the house. Ever.
Can anyone explain to me how these 20 students could "create wealth"?
They are welcome to dismantle and rearrange parts of the house at will, but they cannot leave its boundaries. They can also increase their population at will by having other college students (the pizza deliver guys) join them, but the newcomers bring nothing with them but the clothes they are wearing.
The analogy to our world economy is crude, but contains the same essential features. We have the free electricity (solar influx). We don't have the beer, pizza, or working plumbing, though we have a large water-treatment plant (the hydrologic cycle), a composting toilet, and a greenhouse.
Can anyone explain to me what it really means to "create wealth"?
It seems to me that wealth creation is impossible. What happens is actually wealth redistribution. We draw semantic lines that say "mine" or "ours", and when we put stuff inside that line, we say that we "created" wealth. But we didn't. It's a zero-sum game, and for us to increase "our" wealth, something or someone else has to lose it.
If this is essentially true, then isn't the entire concept of "wealth creation" through investment essentially a pyramid or Ponzi scam?
I'm looking to gain a basic understanding of what economists are talking about in the context of the real world. Because it makes no sense to me at all.