Do services create "wealth"?

Miscellaneous Newbies
1

I’m a newbie in economics, so I obviously have some reading to do. But this particular question greatly disturbs me as I’m a law student (thus preparing to enter a service “business”) and I have some trouble finding legitimacy to my future activity from a wealth point of view.

My disturbing is even greater as I intent to specialize in social security law. As I understand it, social security is mainly (if not only) about redistribution of resources. So if I come and charge fees, am I just basically “stealing wealth”?

Another example would be a comedian. He surely has entertained me during 2 hours and to some extent I can consider myself has “wealthier” because of my better mood. But I will most probably have forgotten all of this one week later. So is this really “wealth”?

My examples may be bad but provide a good introduction to my understanding of services.

To me, services are a trade-off from material needs/desires to immaterial needs/desires and thus necessarily reduce material wealth. If we take “wealth” as “well-being”, services can then only create wealth if immaterial needs/desires surpass material needs/desires. The disturbing part is that it is a one-way trade-off. I can trade material for immaterial, but I don’t know someone who is capable of transmuting immaterial into material goods. (I don’t consider “services”, as for example scientific researches, which can improve capital efficiency)

Since we have limited material resources, it seems like a reasonable assumption that only a limited number of people can have private property on material goods (well…that’s why we “invented” private property in the first place). All the others (non-homesteader) have thus to specialize into services to make a living. If I am right in saying that services necessarily reduce material wealth, isn’t that right to also assume that if/when the economy recovers from the credit expansion, a large number of service providers are doomed or have to be if we want to keep our material wealth? (Another great concern would then also be the population expansion)

Is my understanding a complete mess? If it is (and even if it isn’t), could you recommend me some literature to help me improve my knowledge?

2

You do put in labor into your work. You’re thus being paid for it.

3

I would say that it depends on the service. I think there would be attorney’s in a free society. I think attorney’s create wealth in that it saves an individual time by not having to research law. Which means individuals have saved time.

I would argue that a comedian consumes wealth. But that is like consuming bread you have made. You can either consume it, or trade it to a comedian to entertain you for a little while. Either way, you do not have the bread anymore, and really nothing afterward that you can use to trade for something else.

4

all material objects that are valued as economic goods( that people subjectively value) are being valued for the services they provide.

5

Wealth is an accumulated resource that provides benefits over a long period of time. Services, in that sense, aren’t wealth, although they can be used to produce and preserve wealth.

6

I think I understood my mistake. While accepting that value comes from a subjective judgement of individuals, I somehow continued to think of material goods as having some inherent value. Consuming something with inherent value for something with no such value thus made very little sense to me.

But with both having no inherent value, it makes much more sense! Well…I hope I’m now on the right track.

Thanks for your replies!

7

I somehow continued to think of material goods as having some inherent value. "

what do you mean by material goods? any tangible thing has some property of inherent value. grains, water, etc

8

"To me, services are a trade-off from material needs/desires to immaterial needs/desires and thus necessarily reduce material wealth. "

If we take “wealth” as “well-being”, you havent said much here..wealth as well being?? well-being is…good fortune to have.lots of berry bushes or fields techniques to cultivate fields of pest free berry bushes…over periods of time???

services invoked to create pesticides, fertilizers, etc??

9

Not true, as far as economics goes. Objects are subjectively valued on the basis of the services they render to an individual.

10

subjectively valued

material is an inhereent value..otherwise there would be no goods

11

This doesn’t make sense. Objects hold value for individual actors. If someone values a certain finished product, then of course they’ll value the materials that contribute to its production. That doesn’t give the materials some “inherent value”—if the person thereafter decided they didn’t want the finished product (and the factors were all purely specific), then they wouldn’t value the factors anymore either.

12

I think you’re on the right track, StrawVince. Some answers here have been wrong or incomplete, so way to see past them and think on your own.

Economic values are all subjective. All economic activity is essentially rearranging stuff in a way that may, or may not, be more subjectively valuable than it was before.

Consider this example: a junkyard takes a car with a lot of good parts still, and crushes it for scrap. Have they destroyed wealth? Now in my personal opinion, they probably have, yes. How could the $100 or whatever for the raw scrap metal possibly be worth more than all the complex, useful, and difficult-to-find and thus expensive machinery, doors, parts, etc.? However, I do not have to run the junkyard. His decision is partly skewed towards scrapping by the gov’t: artificial land price inflation called property tax, onerous decrees by the EPA putting more and more junkyards out of business, etc. However, even in a free market, I have to admit there will be times when the time has come to say goodbye and the junkyard or towing company owner will see more profit in scrapping a car than leaving it taking up space in his yard. He is the one to make that decision. A rearrangement of resources that may seem wasteful to one may seem profitable to another. The market sorts it out as best as can be done.

Your lawyering is kind of like crushing that car. You take all this perfectly good wealth – the food you eat, the house you live in, and whatever else your lifestyle consumes – and rearrange it into… what? Paperwork and courtroom oratory, I guess. Sounds pretty worthless, but if you can make a profit at it on the market, that means you’re actually creating wealth for your clients. If you’re able to keep some guy out of jail, let’s say, you allow him to be happy and productive for 20 years during which he’d otherwise be a captive and a drain on the economy, and so if he pays you 5 years worth of wages for this “intangible” service, is the guy wrong? Are you destroying wealth, or making, on net, 15 years’ more wealth possible?

Anyway, it’s all subjective, whether rearranging transmissions into soup cans or food into paperwork. If wealth is increased, you make a profit. If destroyed, you post a loss.

I personally can’t imagine why a libertarian would want to go into Social Security law!! Helping gimps and geezers rip me off? You’ll be basically an accessory to the crime. Say it ain’t so!

13

I think you raise a good question. It seems to me there is a relevant distinction to be made between things like wealth and abundance.

In fact, every now and again I wonder if true wealth should be understood in terms of ~material beauty~, and not be so narrowly conceptualized as something which can be expressed as a quantity…

Also, a more profound notion of “true wealth” might include an association with other measures like quality of life, leisure time and working conditions. No? A flat counting of “saleable goods”, in an environment of unhealthy working conditions, violent people and so forth doesn’t do much good, does it?

14

I recommend that you read an easy introduction to economics, such as ‘Economics for Real People’ by Gene Callahan. It’s available for free download, in .pdf format on this website. You can also buy a hard copy for a fairly reasonable price. Economics in One Lesson is also a decent introduction to economics, also available in the mises.org store.