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Date: Mon, 10 Sep 2007 01:02:33 -0400 (EDT)
To: James W Mickens <jmickens &AElig eecs.umich.edu>
cc: improvetheworld &AElig umich.edu
From: Kevin Lochner <klochner &AElig eecs.umich.edu>
Subject: Re: mind the gap

James, In the interest of speeding this discussion, I took the liberty of 
speaking for you in the dialogue at the bottom.

On Sun, 9 Sep 2007, James W Mickens wrote:

> To Kevin:

> Every definition of wealth that I've encountered includes money as a type of 
> wealth. Thus, when I purchase an object, I exchange wealth for wealth---money 
> for an object. Given a finite amount of monetary wealth that people will 
> exchange for widget wealth, the decision to give money to Company A is a 
> direct loss of wealth for Company B. The only time that this won't be true is 
> if Company A has already sold its full capacity of 90 widgets. In this case, 
> it has no surplus supply, so a sale to Company B is not stealing an 
> opportunity for Company A to generate additional monetary wealth.
>
> An over-supply of widgets may indeed force both companies to reduce their 
> widget prices, but this doesn't change the fact that both companies are 
> chasing after a constrained set of dollars. As with Melanie's example, there 
> are not an infinite number of dollars waiting to be exchanged for widgets.

<kevin> So what you're saying is that if we build more widgets than 
dollars, the value of all surplus widgets is zero?

<james> no, i'm saying that there is a fixed amount of wealth that will 
end up being exchanged for widgets.

<kevin> but the widgets *are* wealth.  In the days before central 
banks and fiat currencies, economies would often experience deflation 
(i.e., declining prices) as a normal course of events, as production 
technologies improved and the ratio of widgets to currency increased.

Ok, say we're both chicken farmers.  My production of chickens decreases 
the exchange value of your lovely hens because of the extra supply.  Have 
I taken wealth from you?  No.  I've lowered the exchange value of your 
wealth.  I made chickens more abundant and reduced the price of chickens 
for everyone.  In essence, I created so much wealth that people no longer 
clamor over your lame chicken wealth.  Everyone is happy but you.