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Originally Posted by aceventura3
There are circumstances where capital stays the same, labor stays the same, but wealth gets created. A person can come up with a better, more efficient way to do something, creating real wealth, making the "pie" bigger. The result is capital can be redirected or employed more efficiently. The result is labor can be redirected or employed more efficiently.
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What you are talking about here is the reallocation of capital or capital expenditures. It also includes adjustments made to labour practices (training, etc.). Anything that increases efficiency or productivity does indeed lead to greater wealth creation, but the fact remains: wealth is created via capital and labour.
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Certainly as a result of real wealth creation there is increased consumption.
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I don't know what you're getting at here. I'm not sure this is necessarily true.
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Are we disagreeing on what comes first?
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I don't know. I'm simply arguing for the fact of what factors are required to create wealth.
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Do you argue that increased consumption leads to real wealth creation?
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It can. There is a wealth of information that suggests this. Though, I think I'm still getting hung up on your use of the word
real. Are you talking about economic expansion or increased efficiency or increased production capacity? It's a bit confusing. You should consider using other terminology. Normally, in economic parlance,
real has a different meaning from what you're using it for. (I'm referring to the term differentials
real vs
nominal as an example.)
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If it is so basic, clearly state what your view is, rather than telling me I am wrong.
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It isn't my view; it's a fact.
Wealth is created by the allocation of resources. In general, it is the use of capital and labour to generate a product or service for consumption. If a profit is made, wealth happens.
Any questions?
I suppose the risk of trying to be clear and concise means that it's oversimplified, but that's basically how it works.