Marginal utility of money

If that was how the Treasury measured a deficit they'd show there was a deficit in FY2000 instead of a surplus.
I have agreed if you change the definition you get different results. What's you point?

 

That is true. If you talk about the marginal utility of $900,000 to a millionaire it may be greater than $10 to a guy making $20k. So what?

I agree if you change the definition you get different results. What's your point?

 

Still unable to think outside your box! HELLO HELLO HELLO HELLO hello

 

I agree that with special pleading, anything can work, within that "vacuum".

Why is concentration of wealth more marginally useful than full employment of resources in the market for human capital?

 

No, sorry, you are plain wrong. The law applies equally to money in respect to units remaining constant FOR PURPOSES OF THE LAW. For example, the law of supply states that as supply increases price decreases. The law of demand states that as demand increases price increases. Now say the demand for butter increases drastically, but the supply of butter increases along with it. The price stays the same. Do you then say the laws of supply and demand do not apply to butter? Of course not. Because when talking about each respective law, the other is held constant. Otherwise it makes no sense. This is just basic scientific reasoning.

And again, the definition: The law says, first, that the marginal utility of each homogenous unit decreases as the supply of units increases (and vice versa).

 

Not according to the Economists I trust and believe. It would make no sense for money to work the same as goods and services. One can get tired of excessive goods of the same kind. One likely never gets tired of extra money because as Reisman puts it, Man has a limitless desire for wealth. He does not have a limitless desire for bananas, or steaks, or powder puffs. Mediums of exchange are considered different by capitalist paradigm economists.

Now, if you want some examples of neo-liberal economists read Diamond and Saez, http://www.cesifo-group.de/ifoHome/search/result.html?main.query=Diamond+and+SaezThey agree with you. I don't. Neither does Reisman.

 

How much marginal utility would the top one percent of dragons hoarding their wealth have, amongst themselves, once limited to our finite understanding of the Institution of money based markets?

 

Who knows? Who cares? Especially since marginal utility is only a personal perception of satisfaction. In reality it has nothing to do with money based markets except in the mind of those who wish to tax the rich in a draconian manner.

 

A simple exercise which demonstrates that goods and money are conceived differently by the individual.
When goods (or services) have a marginal unit of a given size, and the send marginal unit did not create as much satisfaction as the first, how much less satisfaction do you think there will be if the marginal unit is twice the size of the original unit? With goods (and services) the marginal utility tends to diminish.

Now visualize money with a marginal unit which gives satisfaction to the rich man. How much more satisfaction can you perceive if the marginal unit is even larger than the original unit? With money, as the marginal unit increases in size, how much more satisfaction will the rich man perceive? It is obvious that under those circumstances (which comply with my original OP) the marginal utility of money can increase.

 

From my perspective and in that alternative, it has more to do with full employment of resources a form of marginal utility and that opportunity cost forgone, in favor of simple concentration of wealth by the wealthiest.

The delegated, social Power to provide for the general welfare must include the general prosperity.

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Who cares if marginal utility is as subjective as the value of morals?

 

Sorry, the law of diminishing marginal utility holds units constant, just like the law of supply holds demand constant. If the law of supply did not hold demand constant, it would be meaningless. The same is true for the law of diminishing marginal utility. I have already shown you than Reisman agrees with me, and none of your references to him support your silly claim.

 

Agreed!
Who cares if marginal utility is as subjective as the value of morals?[/QUOTE]Marginal utility has nothing to do with morals. If the individual rich person, take Gates for example, has an increase of marginal utility because the marginal unit satisfies him, then as he did, turns around and gives billions to the needy, hasn't he done the moral thing?

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You have shown me nothing of the sort. I have quoted Reisman several times and he states unequivocally that as wealth increases the marginal unit of money increases in size. You have obviously not read this book: Capitalism: A Treatise on Economics page 51 on, and seriously when it comes to money it is obvious and logical that the marginal units increase in size as wealth increases.

 

He does not state that is the law of diminishing marginal utility. He is talking about a completely different aspect of marginal utility. Marginal units increasing in size has as much to do with the law of diminishing marginal utility as demand increasing has to do with the law of supply. Why is that so hard for you to understand?

 

I agree to disagree that your line of reasoning is sound beyond a vacuum of special pleading. The subjective value of morals is as relevant as the subjective value of worth. A work ethic is one example, and the labor theory of value is another.

Does your line of reasoning only with with money? What about with externalities to the Institution of money based markets? Your line of reasoning supports my contention that private sector markets have no basis for metrics external to their own markets and is a reason for Government.

 

I have no idea what you are trying to get at. I do know that the subjective concept of marginal utility is no more than the perception of the individual and does not have broader implications beyond that individual as to markets or government.

But since you asked a question about my line of thinking does only pertain to money or other mediums of exchange. Marginal utility has nothing to do with morals, special pleadings (whatever you mean by that), labor theory or the theory of money beyond the individuals personal level of satisfaction with the last marginal unit. Trying to read more into it is useless.

 

I am having no trouble at all. As far as I am concerned you can call it the Law of Pooh Bah. When one is discussing money and marginal utility, the marginal unit increases in size with wealth and marginal utility can increase. How many times or ways do I have to say it?

 

How "marginally useful" are the subjective value of morals to any given Individual? It could be one reason why the Socratic method may be useful.

 

A child that does not understand concepts often calls them Pooh Bah. I agree that the unit increases in size. But that has nothing to do with the law of diminishing marginal utility, just as increasing supply has nothing to do with the law of demand.

I have said this a million times, and surely you know that. You are just pretending to be ignorant of the distinction I am making to try and save face.

 

Whatever!

 

No matter how many times you say it, you still don't understand that I could care less if it has anything to do with the law of diminishing marginal utility as you understand it. It is irrelevant to me. The economists who were my professors when I was doing graduate work made it clear to me what the facts are, and taught me to think, not memorize rote. I understand the process of marginal utility of money, that is the important point. I understand that you cannot compartmentalize the marginal unit of money as a constant when dealing with increases of wealth. I understand that increasing the marginal unit for goods and services does nothing but speed up the rate of diminishment. I understand you are trying hard to get me to say money is subject to the law of diminishing marginal utility the same as goods and services. But the fact is, money is not the same and it does not relate to marginal utility the same as goods and services.

 

Then stop saying that law of diminishing marginal utility does not apply to money, and don't create a topic about debunking the notion that it does.

 

You just gave an excellent example of the diminishing marginal utility of money.

Because the only utility money has, is to trade it for goods or services.
Obviously a second car has less utility than a first car, but more utility than a third car.
So it is with every good that can be purchased with money.
Since the marginal utility of every good and service decreases, the marginal utility of money also decreases, but not as rapidly as the marginal utility of any good.
In your example of a $20,000 marginal unit, you might choose to spend the second $20,000 on something other than a second car, which would have higher utility than the second car, so the marginal utility of the money wouldn't have decreased as much as the marginal utility of cars.

 

IF, and if is the operative word, the law of diminishing marginal utility does apply to money, then it is obvious to anyone with 2 or more brain cells that the marginal utility of money is different from that of goods and services. The issue is not whether or not the marginal utility of money is part of the law of diminishing marginal utility. The issue is, when discussing the marginal utility of money it is imperative to understand that as wealth increases the size of the marginal unit (of money) increases such that the marginal utility of money can go up. And my opinion is backed by one of the most renowned capitalist paradigm economist of our time, George Reisman.

 

That is logical, but don't forget, since money is a medium of exchange, if it can be used in any way to increase his satisfaction then there is a marginal utility of that money.

But there is a lot of potential fallacy when discussing what money can be used for. The most important issue is as wealth increases THE MARGINAL UNIT INCREASES IN SIZE thus making the marginal utility of money increasing. Even is, as I posted earlier, the individual chooses to give the money away. Since it is not the amount of money which a person has that is the most important issue, it is the satisfaction (utility) that person gets from the next marginal unit of money.

 

Capitalism: A Treatise on Economics
Page 51
George Reisman says,

"As people grow richer, the size of the marginal unit tends to increase."
He also says, "Furthermore, the fact that the utility of a marginal unit of wealth OF A GIVEN SIZE (CONSTANT) diminishes as the quantity of wealth available to us increases is actually an important aspect of the desirability of increasing our wealth." What we rationally want is to be in a position in which marginal utility of a unit of wealth of any given (constant) size more and more approaches zero." ​

IE, IF we let the marginal unit retain a constant size, marginal utility will diminish.

"Therefore, we rationally want more wealth in order to deal with marginal units of wealth of progressively larger size, and to be less and less concerned with units of wealth of any given size. (constant size)"​