Monday, August 23, 2004

Wealth of Another Type, Part I

I was thinking on the idea of there being many types of wealth beyond money. There is self-satisfaction (the coin of this blog's realm), time, family, health, power, and any other type that a person might place a value on. Any type of economic transaction involves the trading of one type for another, typically from a type in which one has a surplus to someone who would value it more. Having a job is an example: the worker exchanges some of his time for a portion of the wealth of the employer. If both sides are satisfied enough to make the deal (not necesarily so that both are entirely happy, just so that both are better off) then a fair trade has occurred.

Sometimes one can have too much wealth, typically assessed in the eyes of others, like in the case of this poor schmuck. Something like that could happen with other wealths. Imagine a case where a pharmaceutical firm is considering taking on a disease that has had a huge impact around the world, for instance, AIDS. As the company sinks more and more funds into the project, you start to hear rumblings about how important it is that everyone get the future cure or vaccine, so important that it would be immoral to leave it to those who can afford what the drug company might choose to charge for it. Some in various governments begin discussions on breaking the patent on whatever drug might be developed. As the company, the return on investment has just been eviscerated, leaving it questionable as to whether or not the cost of the development can be recouped. Not only will the company be hurt in term of current financials, it will be hurt in the work it can not accomplish in the future that would have been paid for with current profits.

If one such company should go down to such governmental schemes, any future pharmaceutical corporations will become very shy about developing products that can help a great many poor people. Unlike the diamond miner in Guinea, a drug company can choose not to look for wonderful, amazingly useful medicines.

The point I am slowly coming to is that it is possible for a person or a company to become, through happenstance or effort, wealthy in potential wealth. The diamond miner may have had a 182 carat diamond, but in that he can't get paid for it without someone else taking it from him. The drug company would be denied the freedom to convert the potential for health embodied in its discovery into money that could be used to reinvest in other projects or pay off investors. In the case of the drug company, and in many other cases of boneheaded interference, the government forces one side to accept a worse trade off than would have been agreeable to both parties, thereby skewing the results.

Keep your eyes peeled for the next installment where I will take on corporations.

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