2013-07-22

Spotted: Wisdom

Commenter "MikeDC" adds some rather prescient thoughts to this David Henderson blog post. I provide his comment here, in full:
Common people and economics who argue for the "redistribution of wealth" systematically underestimate how intangible much of the nominal wealth around us is. 
Like, someone asked me why China doesn't just take all those dollars they get from the US and, say, buy Exxon Mobile. They pointed out it's market cap was at the time about the same as the Chinese war chest of "dollar reserves". I pointed out that only 2-3% of Exxon shares are sold on a given day. If China attempted to buy them all, the price would skyrocket and they'd no longer be able to. 
Ultimately, our nominal wealth is just as ephemeral as the value of our fiat currency. If we drastically change our expectations of the future (say, by massive redistribution), it will drastically reduce our wealth levels. Even leaving aside the efficiency issues, the very act of taking from A and giving to B will result in a change in the value of what's given.