February 10, 2014
The difference between money and wealth
At Ace of Spades HQ, Monty gives an introduction to Say’s Law:
Jean-Baptiste Say, an 18th-century economist and follower of Adam Smith, recognized one of the most fundamental laws in all economics: the entirely common-sense observation that consumption requires production. This axiom is called Say’s Law of Markets.
However, this axiom is often mis-stated as “production creates its own demand”. This is incorrect — production is necessary for consumption to take place, but production anticipates demand, it does not cause it. Production is speculative in this sense. The simple act of producing some good or service does not, in and of itself, create demand for that good or service. (This is true even for basic commodities.)
What Say’s Law really says is that production is the source of wealth. Market-driven production creates value and provides choice to consumers. Inventors and innovators bring new products to market, and as consumers are exposed to these new products, demand rises with the utility or desirability of these new products. New markets are opened by innovators who are able to tap into needs and wants that consumers didn’t even know they had until a new product or service is offered.
And he explains why money is not wealth:
So what is “wealth”, really? (I could write a whole book on the difference between “wealth” and “money”, but I’ll try to boil it down.) Wealth is options. Wealth is choice. Wealth is variety. Wealth is agency — being able to do what you want to do when you want to do it. Wealth is surfeit — having more than the essentials of life. It is comfort, leisure, ease — or at least the agency and option (those words again) to avail oneself of leisure. Simply put, wealth is stored value that can be drawn down in various ways, only some of which involve the exchange of money for goods and services. And how is wealth created? Through production, because production must necessarily precede consumption.
Money correlates with wealth because money is a medium of exchange and a store of value. Rich people have a lot of money because they are wealthy, not the other way around. Wealth allows us to buy a bigger house or better car or nicer furniture. It pays for a nice dinner for two at an upscale restaurant. Note well: wealth buys these things, not money per se. Consumption is the draw-down of wealth, not the simple expenditure of money.
Money is the oil in the machine of an economy, but money is not in and of itself wealth. If I am stranded on a desert island with a thousand gold coins, I am just as poor as if I were a homeless vagrant living in an alleyway somewhere, because I cannot exchange my gold for things I want or need. It does not give me options or variety or comfort. My gold facilitates neither production nor consumption absent a market mechanism that makes use of it.
A “Dumb” parody that Starbucks finds unamusing
I am not a lawyer, but it seems to me that this “parody” of a Starbucks shop is too similar to the real thing and that it would be easy for someone to think they were buying “the real thing” at this store:
A store labeled as “Dumb Starbucks,” using the Starbucks corporate logo and bearing an almost identical look to an actual Starbucks, opened up in Los Feliz on Friday, according to employees.
It was open until about 6 p.m. Saturday and drinks were free as part of what a barista called a “grand opening.”
The coffee shop reopened again Sunday morning and coffee was again free. Dozens of people could be seen waiting in line to get in.
Messages left with people associated with “Dumb Starbucks” seeking comment have not been returned. Messages left with Starbucks Corporation have also not been returned.
The menu was limited.
On Sunday, there still was no business license or health code rating posted in the establishment. The baristas said they were hired from Craigslist.
Despite the popularity, customers seemed confused about what exactly was going on.
“I saw online that there was a Dumb Starbucks sign. One of my friends posted about it, and I live across the street, so I just walked over,” Jonathan Brown told KPCC. He described it as “weirdly off-kilter,” with everything looking like a regular Starbucks except for the word “dumb” in front of it.
Their “FAQ” posting shows that they’re aware that this ploy may not be lawyer-proof:
Update, 11 February: The prank is revealed to be the work of Nathan Fielder.
Mr Fielder appeared in person at the store to make the announcement, where he said there are plans to open a second outlet in Brooklyn, New York.
There had been widespread speculation that the store, which uses Starbucks’ trademarks, was a publicity stunt.
Starbucks said they were aware of the store but denied any affiliation.
“We are evaluating next steps and while we appreciate the humour, they cannot use our name, which is a protected trademark,” a Starbucks spokesperson said in a statement.
The NFL’s first openly gay draft candidate and the Vikings’ image problem
It’s likely to be a very tense day in the public relations office of the Minnesota Vikings, after Missouri defensive lineman Michael Sam came out … and the jokes started about the only team in the league that wouldn’t draft him. At The Viking Age, Dan Zinski rounds up the first crop of jokes and rumours:
News broke late Sunday afternoon of former Missouri defensive lineman and current NFL draft prospect Michael Sam’s decision to come out as a gay man. Immediately the jabs started appearing on Twitter, the great social media instant pop culture temperature gauge.
“Well, I know the Vikings won’t be drafting Michael Sam,” tweeted @dbaby_23.
“I’m going to go out on a limb and say Michael Sam will not be drafted by the Vikings,” tweeted @ChrisJamesMMA.
“100000 dollars says the vikings dont draft michael sam,” tweeted @sports_scene.
“I bet Michael Sam would make a great special teams player for the vikings!” tweeted @MattesonTrevor.
“well you know the Vikings aren’t gonna draft Michael Sam,” tweeted @Miyag_e.
And on and on in that vein.
Endless jokes about how the Vikings will never draft Michael Sam because they have an openly homophobic coach on their staff.
Completely unfair jokes, because Mike Priefer, even if he thinks the things Chris Kluwe says he thinks, doesn’t speak for the team. He only speaks for himself.
But still, it’s out there. It’s in people’s minds. The Vikings are guilty of homophobia, if only by association.
A willing association with a man whose public image is, justly or unjustly, that of a bigot.
The timing couldn’t be much worse for the Vikings: they had an ongoing investigation into Chris Kluwe’s accusations against Mike Priefer, but they also had a new coaching staff being hired. They couldn’t just part company with Priefer while the investigation was underway for fear of being sued for wrongful dismissal. If the investigation sustains Kluwe’s side of the story, the team can discipline or dismiss Priefer with a clear conscience (assuming that the investigation isn’t a whitewash from the start), but if they clear Priefer of any wrongdoing, they’ll probably take an even worse beating in the court of public opinion … at least until the next NFL scandal comes up.
The media attention on the story of the first openly gay NFL player (assuming he’ll be drafted, that is) won’t be over quickly. The Vikings can only hope that their share of the attention will quickly diminish.
Putin’s homophobia is making the case to allow same-sex marriage
The Russian leader’s anti-homosexual agenda is making converts of people like Telegraph columnist Cristina Odone who had been strongly against allowing same-sex marriage:
Vladimir Putin has succeeded where Peter Tatchell failed. I loathe the Russian president and admire the gay rights campaigner, but it is Putin that has made me rethink my view of gay marriage.
I have written before about my fear that legalising gay marriage would affect the special status of marriage as a sacred institution. I have argued that once gay people could demand to be married, believers who refused to open their churches or even church halls to the ceremony would be punished. But Putin’s homophobic measures have changed my mind. If I oppose gay marriage I may be seen as condoning his anti-gay campaign. I couldn’t live with that.
Russia’s anti-gay laws and practices are odious. Last summer, the Duma passed a law to “protect children from information that can bring harm to their health and wellbeing”. The legislation can stamp out any organisation seen as pro-gay and fine it up to 1 million roubles; foreigners can be arrested for 15 days and deported from the country. (Note: circulating Nazi propaganda carries a fine of up to 2,000 roubles: Russian parliamentarians regard non-traditional relations as far more pernicious.)
The new law is easy to manipulate, allowing for example the authorities to shut down a helpline for LGBT teenagers, the Children-404 project: by providing sympathetic advice to isolated, bullied, ostracised, depressed and sometimes suicidal LGBT teenagers, the group is guilty of propaganda
