which Big Four UK bank will be 1st to go kaput?

"Tim Woodall" wrote

Then what are their values, immediately before sale -- using the same valuation system as you used immediately after the sale?

"Tim Woodall" wrote

That's just another intermediate stage that we hadn't mentioned before : the initial stages of painting might reduce wealth, before the latter stages increase it (by more than it was reduced).

"Tim Woodall" wrote

That's just another new valuation system...

"Tim Woodall" wrote

No, it doesn't - you're just changing the valuation system being used. The object in question doesn't change at all in the microsecond of sale, and so it's value is the same - but you've decided to use a different valuation system. Fair enough, but that means you can't properly compare the values before & after, which are based on different valuation systems.

Effectively, the (better) painting was *already* worth more than the other, inferior, paintings - even just before it was sold. You just realise that, and change the valuation system accordingly.

Consider valuing something in GB Pounds, then immediately valuing it in US Dollars. You'll get a bigger number (assuming

because you changed the valuation system? I think not...

"Tim Woodall" wrote

What has the world got extra after the sale, that it didn't have beforehand?

It's obvious that from the act of painting, the world loses some paints/canvas and gains a wonderful picture. If that picture is considered to be more valuable than the paints/canvas were, then the world's wealth has increased.

But what changes in the world's wealth when a sale occurs?

"Tim Woodall" wrote

Don't be silly. Only *your* perception of your *own* wealth has to increase for you to sell it. Don't forget that the sale changes your possessions, and the possessions of the buyer, but does *not* change total global possessions.

"Tim Woodall" wrote

Yep. Two different valuation systems, on the same object. But the object itself doesn't change.

It's like you valuing some oil at 100 (valuation system: pounds), and an American valuing the same oil at 200 (valuation system: dollars). [Assuming an exchange rate of $2 : 1 for simplicity.]

The amount of oil there doesn't change, just because of the person valuing it!

"Tim Woodall" wrote

If someone else owned it, then it wouldn't be the same painting - for instance, there wouldn't be any sentimental value there for you.

But what if someone stole *your* painting? Would you pay a

10k ransom to get it back? Would you pay a 100k ransom?

Which would you prefer to own - 10k, or 100k, or your own painting? As you wouldn't sell it for 100k, it sounds like you'd prefer to have that painting than to have 100k. So why wouldn't you pay the 10k ransom to get it back? You'd then have the painting plus 90k, instead of having 100k...

"Tim Woodall" wrote

No, the wealth stayed the same - it was just perceived differently by different people. Like valuing in pounds or dollars...

"M Holmes" wrote

Yep, exactly! Wealth only measures *some* of that...

"M Holmes" wrote

Wealth is just a measure of economic value. That can increase when something is made from something else, but will stay the same when things are just swapped.

Considered by whom?

We get proof that someone considers the painting of some value.

What other kind of wealth is there but perceived wealth? Are you claiming that if everyone died in a gas attack, paintings and such would still represent wealth?

Your problem is that you are hung up on the things which are traded, not the value they have for the people who trade them. The economy exists to foment human happiness, not to creat things and move them around.

True, but it ain't the object that's important, it's the people.

So the oil left in the world is really of the same value it was before wwe had the infernal combustion engine? It's not really worth 100 Dollars per barrel?

If you agree its value has changed, then why? Surely you'd just point out that it is the same oil that's always been there?

FoFP

The matching of buyer to seller.

An artist might create works and sell them for 50GBP. That maximizes their profit.

I have a gallery and I think I can sell the pictures for 100GBP due to more exposure.

So I say to the artist that if they'll give me an exclusive contract then I'll buy all their pictures for 45GBP. (Lower because the artist no longer has money tied up in unsold pictures so the artist's profit remains constant).

I then sell the pictures for 100GBP making a profit in the process.

Either my buying and selling is creating wealth (or hanging the picture in my gallery is continously creating wealth up until the point the picture is sold but that's a bit bizarre - in order to work out the global wealth on a particular day you'll have to wait until the picture is sold) or my running of the gallery has no effect at all on global wealth but magically increases the artist's wealth creation while painting.

Tim.

"M Holmes" wrote

By whoever is valuing the wealth, of course. As has been mentioned many times, there are any number of different valuation systems.

"M Holmes" wrote

Does that proof have an economic value? If so, how much? [Using your valuation system, of course!]

"M Holmes" wrote

I can't think of any other. I was merely pointing out that it was his perception that was important there, not that it was a perception (hence the emphasis on the word "your" rather than on the word "perception").

"M Holmes" wrote

Yes, of course they would. When the remains from long-lost civilisations have been found (eg gold trinkets etc etc), those remains still represent wealth.

"M Holmes" wrote

Your problem is that you are hung up on looking at each item from a different viewpoint, and then trying to add apples and oranges. You can't add the value of something using one valuation system to the value of something else using a different valuation system, because they don't correspond. To get a true global value, you need a *single* viewpoint (ie, one valuation system).

"M Holmes" wrote

The person just gives you a particular valuation system to use. That's important when you want to know their particular perception of the wealth.

But when you want to determine the change in value for "total global wealth", you need to stand back, take a global view, and choose one valuation system for everything (before & after). When you use different valuation systems to value objects before & after, you'll get different answers

**because of** the different valuation systems involved -- not because the actual wealth has changed in any way.

"M Holmes" wrote

No, a barrel of oil in 2008 is a different object to a barrel of oil in 1800, and so necessarily should have a different value...

"M Holmes" wrote

Because it is part of a different environment, it's a different world today than it was before.

But a trade/sale happens within a microsecond; in that time, the world does not change and so the value of the object does not change.

"M Holmes" wrote

No, the value comes from it's existence within the world; it's a different world now, so the value is different.

"Tim Woodall" wrote

Just after the artist has painted the picture, the world's wealth includes (1) the painting; (2) 50 in the pocket of a possible buyer at the artist's workshop; and (3)

100 in the pocket of a possible buyer at your gallery.

If the artist sells it for 50, then afterwards the world's wealth still includes the painting plus the 150 (now 50 is in the artist's pocket instead of the buyer's pocket at the workshop).

If instead you sell it for 100, then afterwards the world's wealth still includes the painting plus the 150 (now

45 is in the artist's pocket and 55 is in your pocket instead of being in the pocket of the buyer at the gallery).

No extra wealth is created by you selling it for

100 rather than the artist selling it for 50. See? It's 'painting+150' both ways.

Whether the painting is considered to be worth 50 or 100, it's the same immediately before & immediately after the sale itself.

There are a bunch of accounting fictions which may be more or less accurate guesses. The only real valuation comes when someone actually buys that thing or something identical to it.

It's worth at least what the buyer paid for it, to the buyer. That's all we really know. The rest is just guessing.

So there's nobody left alive, but you think a painting still represents wealth?

That's just nuts, unless you're counting its value as food for the cockroaches.

True, but we can make some guesses. especially where there are lots of the same thing, as with shares in a company. We get a kind of average value across many people.

That's nuts, but who did you have in mind for the job of valuing stuff? If it's me, I warn you: Hawkwind records will be expensive, and football memorabilia will be worthless.

That's all a seller really needs to know.

There is no "global view" there's just us individual chimps. The globe isn't sentient you see, so it can't value anything.

Huh? By your argument (pre and post the painting trade), that barrel of oil (under the sand somewhere) in 2008 is exactly the same oil that was there in 1880, so the world is no richer.

If you think it is, then how did that extra wealth arise? The oil hasn't done anything and nobody has done anything to it.

But the oil hasn't changed. I submit that what has is many people's perception of the value of a barrel of oil. Thus showing that value depends on the perception of individuals.

Now, if that can happen to a barrel of oil, it can happen to a bunch of oil-derived paints.

What's the difference between one microsecond and a bunch of them? The thing that changes value *is* trade. That barrel of oil changed value a whole bunch iof times between 1800 and now, all of them during a trade. Shares change values millions of times per day, always as a result of new trades. Trades are *how* we value things.

Hmmmm. What colour is the sky on your world?

FoFP

But you can use the value at the last sale. Then wealth can only change when there's a sale.

For identical items (e.g. shares) this allows some people's wealth to change even though they don't partake in the sale.

You can refine this. For one off or illiquid assets you can use estimated sale value. But you have to assume that the sale process started earlier - if you found a van Gogh in your attic you'd say your wealth had increased by more than you could sell it to to the next person you saw. (That person would empty their pockets in the expectation that they'd be able to sell it for more in a few months time)

And lets say you do find that van Gogh and, following advice, you auction it at Christies with a 10 million reserve. But it fetches 20 million. Surely you'll feel 10m richer after the sale than you were before it. Maybe you'll think the buyer was a mug for buying it - but if the next lower bidder was 19.9m then surely he can't be wrong by more than 100k.

Tim.

And yet you explain the increase in value of a barrel of oil under the ground, which nobody has moved or changed at all, by someone having replaced the entire planet.

You should write science fiction.

FoFP

You've been inexact: *money* only measures some of it. Wealth *is* all of it.

So the swapping of the beans for the insulin, saving two lives, you don't think there's an increase in "economic value" there?

You seem to think there's some value system that's independent of what individuals want things for. There ain't.

FoFP

Before:

W0GBP+picture+artist happiness+person1 happiness+person2 happiness+gallery happiness. (Assuming for simplicity that happiness is only a function of owning the picture)

Artist sells for 50gbp to person1.

Total wealth = W + delta happiness of person1 + delta happiness of artist.

Artist sells for 45GBP to gallery who sells for 100gbp to person2 (Also assuming that the 5gbp difference is the cost to the artist of finding a buyer rather than selling to the gallery)

Total wealth = W + delta happiness of person2 + delta happiness of artist.

Clearly in both cases the artists has gone from picture to no picture so delta happiness of artist must be the same in both cases.

Therefore, net wealth change by the gallery is delta happiness of person2 - delta happiness of person1

Surely you cannot believe that this is necessarily zero? Personally I'd put a monetary value of 50GBP on this. I'd agree that it doesn't have to be 50GBP, it doesn't even have to be positive but I don't agree that it is zero by definition.

I know of one picture my partner would dearly love to own (and the owner is interested in selling) - I'm sure the ownership would give her more increase in happiness than someone with the 100m or so it would cost who would, almost certainly, buy it partially at least for "investment" purposes rather than for the pleasure of ownership. If she had the 100m she'd put the picture back in the National Gallery (or maybe a gallery closer to where she lives) but the ownership would mean that the picture could no longer be hidden from her.

Tim.

"M Holmes" wrote

That's rubbish. Ruining the painting reduces wealth in the same way that producing the painting increased wealth.

What are you aiming at there?

"M Holmes" wrote

Maybe so, but I still contend that the object had the same value both immediately before and immediately after the sale.

"M Holmes" wrote

How much did the buyer pay for that proof? :-(

Of course.

"M Holmes" wrote

No, it's the remains of our civilisation which are left over for whoever/whatever comes after us. Do you think the gold trinkets of ancient extinct civilisations have no more value than the constituent gold, after they have gone?

"M Holmes" wrote

That's just one more valuation system.

"M Holmes" wrote

I had no-one in mind, and don't care. It could be anyone. But when you compare figures, you need to compare like-with-like (ie, use the same valuation system both times).

You see, there isn't just one value for wealth - it depends on the valuation system you use. You can determine several different figures. But none of them will change on a sale, they'll just change when the object in it's environment changes.

"M Holmes" wrote

... each of which can value total global wealth using our own valuation system (we may well get different answers to each other). But each of us should get the same answer after a sale, as we get before.

Not at all, where do you think I said that?

"M Holmes" wrote

The 2008 oil is worth more than the

1880 oil, because it can do more things.

That's because people's efforts have introduced more technology that can use that oil.

"M Holmes" wrote

But the possible uses that it can be put to, *have* changed! It's value comes from how it can be used...

"M Holmes" wrote

One is much smaller? ;-) Joking aside, really the sale happens in an instant (zero time), and a bunch of zeroes is still zero.

"M Holmes" wrote

No, I suggest that it just changes the valuation system.

"M Holmes" wrote

No, the trades just give us more information so that we can refine our valuation systems...

"Tim Woodall" wrote

But if so, I would also feel that the buyer was

10m poorer after the sale than before, and so the total global wealth will not have changed.

I see. You're saying they have value because the cockroaches will like them once they evolve sentience? I was right about your potential career in science fiction.

ObMontyPython: I don't...

FoFP

Reductio Ad Absurdum?

FoFP

Those Harry Potter books have finally found some use ;-)