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Friday, November 19, 2010

Is Wealth Chosen?

I understand the basic concept of the saying we have been hearing in class that 'income is earned, wealth is chosen.' As far as that saying goes, then I guess a good definition (in terms of the saying) is that wealth can be described as potential for future transactions. That being said, I do think there are some things wrong with this saying.

Not everyone has the capacity to choose wealth. Although many people want to ignore the fact or are simply unaware, there are people who after bills, taxes, food, and so on, have no disposable income left over. They are just making enough to survive, and some make even less than that. Again, I understand the concept behind our saying here, but to say that ALL people can choose wealth is not correct. Then some people will say that you always have the option to not spend, like the opportunity cost to breathing--not to breathe (just fyi you'd die). This is an extreme, but there are people I know who have done all they can, who are either homeless or are living in Section 8 housing, and still cannot put enough money away at the end of the month to choose wealth. Again, I understand that this is a very small few but the way it was presented sounded to me like everyone was able to choose wealth.

I believe there is a certain point where you are able to choose wealth. This point would be where your total income exceeds your total costs of living. Whatever this point may be, and I have not laid down a number to describe that point, you must be above that in order to choose wealth. This statement becomes kind of shaky because how much the individual needs to survive when it comes to food/shelter is different for every person, but if we think about it as an average then it starts to become more concrete. These are just some of my thoughts. Let me know what ya think!

Your post seems to me to mix positive and normative discussion. My suggestion that wealth is chosen is a positive statement, and I do not mean to say anything normative without adding explicit value judgments.

If you have wealth today, then I think it is necessary for you to either (1) have chosen to save some of your income in the past, or (2) someone else chose in the past to save some of their income and their wealth was then either given to you or taken from them. Is there any other way for you to have wealth? If you agree with this as a matter of reality, then what, if any, value judgments would you apply these observations?
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