Leyla Shen wrote:Indeed. And I’m sure your kindergarten-level thinkers will find it most satisfactory.
I guess you haven't reached that level yet.
Wow. Could you be more disingenuous, or are you really just that ignorant? He hasn’t “CREATED $10 of WEALTH,” he’s made $10 (or gems) IN PROFIT through this particular sale.
And where did this money come from? What wealth do they represent? The trader sure didn't make the first village worse off (they are actually $10 better off), and he hasn't made the second village worse off (they are
also $10 better off). This additional wealth was
created via the miracle of logistics -- you know, getting stuff from where it's
less valuable to where it's
more valuable, thus creating value -- wealth -- via arbitrage.
What you are still missing, dimwitted child, is that
things are useless until people make use of them -- and then
they are only as useful as the use they are put to, and not one iota more; which therefore means that if the same things are put to differently valued uses in different contexts, such different uses in fact amount to changes in wealth.
That is, the chickens are STILL selling at the same price before he was involved as after—$11.00! That is, again, he hasn’t INCREASED the exchange value of the commodity—he’s manipulated existing wealth.
Wow. You totally don't get it, huh? You poor, poor thing.
You see, girlie, chickens don't 'sell at a price'. They 'sell at a price'
in specific contexts -- in our case, in one of two villages. The chickens have no intrinsic price which is the property of the chickens, dummy, they have a dynamic price which is the property of the relationship between the seller of the chicken and the buyer thereof -- and any differences between such selling prices are economic inefficiencies, inefficiencies which are optimized away via arbitrage. Trade thus is systemic self-optimization of the economy -- moving from a less-efficient (more wasteful) state to more efficient state. Trade creates wealth via optimization.
Now of course in our economy, commodities usually sell at pretty much the same price everywhere,
because geographic arbitrage has already been exploited to optimize those inefficient differences in price away; which fact you can think the supply/demand-driven free market of course. Thus, as long as idiots like you ignore other forms of arbitrage (e.g. chronological), you can fool yourself into thinking that chickens possess a fixed worth, representing a fixed amount of wealth. But only as long as you close your eyes and ears and pretend that the rest of spacetime doesn't exist.
victor wrote:Village #1: $90 worth of chickens
Village #2: $110
Merchant: $100
Total wealth: $300
After the transaction, wealth stands as follows:
Village #1: $100
Village #2: $120 worth of chickens
Merchant: $110
Total wealth: $330
The merchant has created $30 of wealth -- a 10% increase -- via arbitrage.
Wow, yeah—magic! Right, Victor?
No, moron,
relative nature of value. Value depends on context, thus optimizing distribution actually creates value.
The simple fact, which you cannot dispute but are too intellectually corrupt to admit, is that the entire system increased its wealth by 10% via arbitrage -- which is basically the economic equivalent of fine-tuning the system. You know, kinda like tweaking and tuning an engine creates additional performance. All of a sudden the tweaked engine gives you better mileage and/or more horsepower for the same amount of gas.
By your autistic thinking, saying so is equivalent to claiming that the mechanic who tweaked the engine created gas ex nihilo.
Every single act of efficient rational trade (i.e. where each participant is a rational agent pursuing their own self-interest, barring market failures)
creates wealth. That's because wealth is not
things, it's
what people do with things, and so redistributing things more efficiently generates wealth -- it fine-tunes the usage patterns of stuff, getting
stuff to those people who derive more use from it, i.e. to those to whom it's worth more.
Every act of efficient rational trade, stupid girl, is a
Pareto improvement -- by definition. And Pareto improvements,
by definition, make the economic system as a whole better off, i.e. more wealthy. Each Pareto improvement creates wealth.