Monday, August 08, 2005

Wealth Creation and Destruction - don't throw it away

Wealth is created every time value is added to a product or service. General Motors forms metal and plastic into cars, transforming cheap raw materials into expensive autos. Value is added and wealth is created. Everyone understands that.

What doesn't occur to many people is that when we junk that car, value is subtracted and wealth is destroyed. A valuable vehicle becomes raw materials and landfill.

In fact, everything we throw away, consume or burn is wealth destroyed. A beer bottle has value as a container until the beer is consumed and the bottle is chucked in the trash. Gasoline has value as "stored energy" until we burn it.

The wealth of an economy is constantly changing. It increases as new value is added. It decreases when we use stuff up.

It's easy to see how manufacturers create wealth, but retailers create wealth too. Value is added to a store's inventory by bringing it to the customers and by holding it until the customers are ready to buy. Most of the time the retailer doubles the value of the inventory (as reflected in the difference between the wholesale and retail prices).

Do retailers also destroy ? Yes. Merchandise arrives in cartons, which we throw away. Wealth destroyed. Light fixtures use electricity. Wealth destroyed.

We can all help increase the total wealth of our economy by slowing the destruction of wealth. Install efficient lighting and HVAC units. Encourage wholesalers and manufacturers to ship merhandise in reusable containers. And most importantly -- sell products that are long-lasting and retain their value.


Anonymous Anonymous said...

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6:19 PM  
Blogger Wealth Creation said...

I totally agree. We live in a wasteful society and many people are mainly concerned in area to save our environment when it doesn’t directly affect their own lifestyle. For instance, a city person may decide to run a “save a rain forest” campaign, and then merrily take their car to work on their own when they could car-pool or take the public transport to cut down on greenhouse emissions. The very emissions that are killing rain forests.

We need wealth in our community. Maybe we need more wealth between the ears of our own people that have such wasteful habits. There are many good people out there that do the right thing for us. Let’s make wealth creation a topic for our environment. Let’s save the existing wealth and preserve it the way it is.

8:09 AM  

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