A question from Yahoo! Answers:
Is wealth finite or infinite?
I am curious about how there can be two sides to this argument. How is it that some people believe wealth can be created while others believe it can only be redistributed?
I am not personally sure which answer is right. I am looking for proof, or at least well reasoned responses. I am not looking for politics, trash economics, or opinions.
As far as I can tell, arguments that wealth is infinite seem to be poorly reasoned. They generally depend on vague situations which appear true at first glance, such as “If you have a great idea and get people to pay you for it, you are creating new wealth.”
On the other hand, the proponents of the finite wealth side seem to use outdated examples that tie wealth to natural resources and the services that support them. Has something changed in the last hundred years that has changed wealth from being a finite thing to a infinite thing?
Some of those who believe that wealth can only be redistributed often assume that the only wealth worth talking about is the ownership of natural resources. Since the amount of natural resources is finite, so must be wealth. Others are simply short-termists; they refuse to see that although wealth changes very little from one quarter to the next (and thus can be assumed to be fixed in the short-run), it can change substantially over the lifespan of one generation (not to mention a century).
Those who believe that wealth can be created usually contend that wealth is a product of labor (some would say, labor and capital, but then, capital, too, is a product of labor). Since capital accumulates over time, labor generally becomes more productive, hence, increasing creation of wealth…