What Is Wealth?
We’ve seen the headlines, we’ve read the news…wealth has gone extinct. With $11 trillion seemingly vanishing from the economy, and the savings of Americans, we can’t do much but ask “Where did all the wealth go?”
What Is Wealth?
Is wealth cash? Is it stocks? Is it ownership, production, future production? Is it red, is it blue? Is it? Well, what is it? Wealth is nothing more than a concept, a number that rises and falls all the while the rest of the world keeps moving. Wealth is nothing more than a thought, a value, of all things in existence, all things in future existence, and the implied worth of all things that have come and gone.
Quantifying Wealth
I don’t think there is a better man for the job of quantifying wealth than Uwe Reinhardt, an economics professor at Yale. In a New York Times piece, Reinhardt has set out to define wealth, a difficult task for both the ordinary man and economic geniuses alike. Though we’re all accostomed assuming wealth is nothing more than dollar signs, Reinhardt defines wealth in such a way that is understandable and practical. I would encourage everyone to read that piece here: Where Is All That Money
Wealth Doesn’t Disappear, It Never Existed
After reading his piece you’ll find that wealth truly is nothing more than the imagination. Reinhardt offers the thought that wealth that disappears never really existed. Lost wealth is nothing more than future expectations that never came into being. So, while we complain about recession, depression, or whatever you want to call this recent blip on our economic radar, it is important to remember that today’s losses are just yesterday’s dreams. We’ve lost nothing.
(Also see the wealth effect.)
This post makes me wonder too, very interesting post, thanks!