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This key book by the UN may be informative for this discussion.  A key implication of their work on this is that intangible wealth accounts for bulk of the total wealth of the developed world (and even much of the wealth of the less developed world). Intangible wealth includes human capital, such as education, but it also includes social capital even more so, such as the institutions, formal and informal, which allow for people to go about getting what they need to maximize well being.  Once you include the intangible forms of wealth, it becomes quite hard to honestly draw any general conclusions about policy strategies for raw materials, labor, or energy since minor shifts in the institutional universe can greatly outweigh major shifts in natural resources or labor/population. Instead such conclusions are going to be very case specific to particular geographies and times.


by santiago on Sun Sep 2nd, 2012 at 12:37:26 PM EST
It's a while since I read that one - but my view then, as now, is that it's a book full of misunderstanding of our current problems.

Institutions affect the choice and effectiveness of wealth strategies - however what this diary is about is what the basic components for creating wealth are - the building blocks for any strategy - something that has become obscured in modern economic discourse.

by Metatone (metatone [a|t] gmail (dot) com) on Sun Sep 2nd, 2012 at 05:58:22 PM EST
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I think if you're not including institutions and education as basic building blocks of wealth creation, you're missing most of the foundation.  This is especially the case since wealth is relative to what people value in life, and institutions are instrumental in determining what is valuable and what is worthless in human society independent of the amount of raw materials available.

Your implicit model of economic value seems to be that wealth is a function of raw materials and human labor with some kind of technology/institutional multiplier.  You haven't specified how people put a value on such production but you seem to discard the utility theory of conventional economics for doing so. So, specify how you think people determine how much raw materials and labor they need to be wealthy or at least achieve an acceptable level of human functioning.

by santiago on Tue Sep 4th, 2012 at 12:49:59 PM EST
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Either you don't understand the purpose of this discussion, or you're trying to justify why it's morally superior for poverty to continue. I think you should re-read your comments in that light.
by Metatone (metatone [a|t] gmail (dot) com) on Tue Sep 4th, 2012 at 05:15:57 PM EST
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I think that's a bit unfair.  In that they set rules and expectations, and set basic minimums in several ways, institutions are key aspects of human wealth and wealth creation.  Public safety matters.  It might be hard to quantify how much it matters to one's sense of well being, but it matters.
by Zwackus on Tue Sep 4th, 2012 at 08:27:11 PM EST
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