Re wealth creation? -- Obvious answer, to you, I suppose, esp
>>I create something that didn't exist the day before, I add together raw materials and my years of experience and I create something that has a value greater then the sum of it's parts. <<
Obviously, it is a subjective measure -- that was my first point -- if you were to describe what you did for a day or a week or a year to 20 or 30 different individuals how many would agree that you created value or wealth?? I suspect there would be many answers which run some along some continuum.
Likewise, there are large numbers of individuals employed in professions that, in large part, only provide work that fits into the service of wealth transfer. No wealth is created from a societal stand point at all -- first thing that comes to mind here is those who work for the IRS or in services related to tax collection or avoidance.
You can, no doubt give me examples within this sphere of those who do add value, from another perspective. Perhaps someone who employs info tech or comes up with a procedure that elimnates headcount in the area -- or someone, who being expert at tax advice, help clients retain more $s and thereby participate in the market to a great extent ...
My second point is that there are individual and societal definitions of wealth creation ... free markets are where these come together in the best way, for the most part. A lot of the focus during the bubble has been in two areas:
1) technical (see productivity) or dollar measures of wealth creation -- see hedonistic adjustments or earnings per share
2) imposition of supposed societal definitions concocted by "free-thinkers" in government - we are all entitled to a specific level of healthcare medical intervention -- once we give everybody what we know they need, no matter what the price, everyone will be the wealthier for it
1) errs because it tries to deny the subjectivity of the measurement. Frankly, I know how much better off I am for having a personal computer -- it probably isn't the same as how much better off you are for having one either.
2) errs because it substitutes collectivism for the marketplace. It posits a higher ethic should govern allocation rather than the marketplace (for deciding what wealth creation is) ...
It is interesting what has happened -- that many have rejected the purely public approach, with some politicians embracing a hybrid system -- some market elements -- some choice limitations -- to ensure a level of care for everyone covered and look at the result -- continuing de facto socialization and increased wealth transfer; less market influence on choices. Now the solution is a patient bill of rights, government supposedly freeing us from what they already created: 'managed' healthcare.
Electricity which was for years quasi-public, supposedly suffered from terrible inefficiencies in the wholesale markets and wealth creation was not "optimal", at least in the minds of the recent batch of government thinkers and economists. The first round of de-regulation (really re-regulation) sought to get transmission providers to deal with "external" users of the transmission system on a somewhat more equal basis with their own generation. (I don't like the term natural monopoly, but the observations which make duplication of costly facilities ineficient from a societal stanpoint can't be discarded at this pt.)
I think this first round did result in some gains in market transactions which increased efficiencies, but for what followed -- it is hard to ferret out how much recent damage in the industry was due to the credit bubble / loose money and how much damage was due to economists imposing their "free market" ideas on a system which has real natural constraints, i.e. transmission and generation are not interchageable.
Prior to the collapse, there was much talk of wealth creation in connection with energy marketers -- after that first de-reg prices did move up and served to stimulate the purchase of and installation of much peaking and intermediate generation capacity.
Often the talk was simply of the expansion of dollar amounts of trading. This was heralded as proof of wealth creation, since higher DTV must have implied that marginal transactions not accomplished under the prior regulatory regime were now taking place and ergo, efficiency must be increasing ...
Lots of plant was invested in (some of the marketers tied up as many as 100 future generators) -- plant even that is long-lived -- now a lot of it is for sale at lower prices and I expect there'll be another lowering of expectations soon. All this when the market -- even with the 2-3 years of volatility (which BTW occured only during a relatively small number of days out of the year) -- couldn't support these without "dedicated" demand -- i.e. a regulated franchise.
Now regulators are back at it again with what one can only laugh at as a terrible oxymoron, coined by supposed economists, Standard Market Design. You see markets that create wealth are not "standardized." They are not "designed," except by the subjectice choices of the many participants in the market. This oxymoron really means the formation of a centrally controlling authority for arbitrary sections of transmission which are really only a part of a whole system, that seeks to fairly price access to the system. Realizing that the difference in utlity of access at differing points to the system -- economists -- who love their equations and know they are right much moreso than engineers -- came up with LMP -- locational marginal pricing. The net result is that in the name of freer markets, the central authority winds of setting not only the price of access to the transmission grid, but also hourly pricing out what generation (or the other services generators provide) is worth "to the system" in any given hour.
Got to give them credit for realizing to the limited extent that they have -- that the good, due to the constraints involved, is an inseparable function of generation and transmission together, but if SMD gets enacted it will be LESS efficient not more -- simply because control is more concentrated. For even though, all three grids in the US are interconnected and every generator is dependent up the use of it's grid, the current system of "non-physical" bilateral transaction is bound to be more efficient than what it is being replaced by -- larger patches of centrally controlled transmission areas.
Got off on a tangent there -- obviously there are areas where it is difficult for markets alone -- the choices of lots of individuals to define best what wealth creation is -- but I think these are pretty rare. In this country we have swung to an extreme, pushing so many decisions into the public arena. Certain public infrastructure, common defense -- in a weaker moment, I might even go for a certain extreme "minimum" on healthcare -- where large numbers of people might be harmed -- what wealth creation is may be better decided through governmental means -- for the rest, I'd prefer to let markets work -- vote with my purchasing power. |
