Marginal utility of money

I think you are confusing the issues of rational choice and rational addiction and any relationship with utility, marginal or actual.

 

Not really since a rational addict may not favor more objective, rational choice theory, in favor of the more subjective, "addiction" and its influence on marginal utility for that Individual, at any given time.

 

So your theory rests on the premise that when Reisman talks about "the wealth of the average member of a society", he doesn't mean (total wealth/total members), something an economist might mean with that term, he means a typical guy, Reisman just uses the wrong word, you know what he really meant, is that what you mean ?

 

That is only one of the grounds for understanding what he said. Since he was talking about a member of society, he was not talking about averaging society. Of coures there are other statements which Reisman also uses to tell us that the marginal unit increases with wealth and that the marginal utility can increase.

Reisman's words were well selected and the meaning of them very easy to understand, at least by anyone who understands English. That is what I mean. Shall I list all the other statements (quotes) which further prove he said that the marginal unit increases in value as wealth increases? Or that the marginal utility can increase? Your argument is weak Goober, just like it was when Mahasattva put you to shame in the other forum. Now buzz of, or educate yourself.

 

Reisman said, "The opening up of new uses for wealth occurs because essential to the ability to increase the supply of wealth is scientific and technological progress, which makes possible not only improved methods of producing goods of the kind that already exist, but also brand new kinds of goods........... as part of the same process of improvement, these inventions were accompanied by the invention of the electric light and all the electrical appliances and, of course, the automobile. In this way, increases in the ability to produce raise the marginal utility of additional wealth along with providing it." Can you find a way to parse that? such that it won't mean what it says? like you have tried to do with all the other quotes provided?

 

That is discussing the macroeconomic effect of technological progress.

Face it, there is nothing in Reisman that says as a person's wealth increases the marginal utility of that wealth increases.

 

Fact is technological progress is also affecting the individual's wealth, marginal unit of wealth and increasing marginal utility of that wealth. One more of your straw man arguments bites the dust!

 

Quote, "Thus, the effect of a growing ability to produce is not only more wealth, but also a higher marginal utility of the additional wealth....... the effect of a growing ability to produce is a tendency toward an increase in the size of the marginal unit of wealth, as well." So of course even though he SAYS there is a higher marginal utility of additional wealth, he really didn't mean that. I guess he was just trying to keep you happy in your own little world of pseudo economics.

What you keep forgetting is, Reisman has been talking exclusively about individuals since marginal utility tends to be thought of as the INDIVIDUALS PERSONAL SATISFACTION either going up, remaining constant or diminishing.

 

Means of production tend to do that due to division of labor and specialization, not the subjective moral value of any given perception of wealth.

 

If the means of production improves due to division of labor and/or specialization, (economies of scale or comparative advantage) it can mean to an individual an increase of wealth as well as that of society. As the wealth increases the size of the marginal unit increases and marginal utility increases as well. That the moral value of such improvements can help create the conditions which generate altruism and better living conditions for all is fine.

 

What if I quibble that while it may be true that the size of marginal unit may increase, it may also be true that marginal utility may not increase if it is merely a corresponding fraction of the previous utility of the previous marginal unit. In other words, a larger slice of a larger pie is not necessarily and "increase" in the marginal utility of the next marginal unit.

Simply needing more to do more in a corresponding manner and fashion is not necessarily an "increase" in the marginal utility of a given unit, even if the marginal unit is larger.

 

That is always a possibility.

Also a possibility.

When discussing economics one can choose to discuss myriad situations and variable. If what you are trying to say is, should the marginal unit not increase, or does not increase enough, then marginal utility can either diminish or remain constant. When discussing marginal utility the key to whether or not there is theoretically an increase or a decrease is in that utility is always the size of the marginal unit; and no two people are the same in their perception of what is enough or not enough value in the marginal unit under consideration.

Simply needing more to do more in a corresponding manner and fashion is not necessarily an "increase" in the marginal utility of a given unit, even if the marginal unit is larger.[/QUOTE]

 

If you want to invent new concepts just introduce your own terms for them rather than perverting the terms of already existing concepts, which mean something else, to fit your concepts.

Seriously.

 

What new concepts are you referring to?

 

Who cares?

So what?

You've already admitted that the MU of $100 to a rich man is much lower than to a poor man.

 

You're posting smilies but can't make a coherent response. Got it.

We've already established that $100 has a lot less MU to a rich man than to a poor man.

Why is it a "phony justification"?

We've already established that $100 has a lot less MU to a rich man than to a poor man. Therefore why wouldn't it make sense to tax that $100 at a higher rate on the rich man if you goal is to maximize overall utility?

We've already established that $100 has a lot less MU to a rich man than to a poor man.

That is absolutely untrue.

We've already established that $100 has a lot less MU to a rich man than to a poor man.

Of course. Now being rich, the same $100 no has a lot less MU to him, as you've conceded.

Please explain how my concept of marginal utility is skewed. Thank you.

Why is that not an argument for a progressive tax rate?

Great.

No is telling the rich man anything.

We've already established that $100 has a lot less MU to a rich man than to a poor man. Given that, why doesn't it make sense to tax that $100 marginal income at a higher right for the rich guy?

 

Wouldn't it be more accurate to say that government is granted certain powers, as opposed to certain rights?

What "rights"? The right to same sex marriage? The right to smoke pot?

Maybe. 60 years ago the top tax rate was 91%, many blacks were disenfranchised, and if you were gay you could be thrown in jail. In some ways we have more rights, don't we?

I'm certainly not against private property. The question is what "rights" that entails. Does that mean in your opinion that the Govt should have no power to levy a tax?

We have never had unrestricted private property rights.

Liberals today want freedom of religion, speech, press, assembly, and free markets.

By the way, why didn't you respond to my last post to you? Here it is again:

 

There was never an intent to set up a government where individuals' whims superseded the power of the Govt.

 

Pretty sure securing folks the right pursue their whims is why we set up a government.


​

 

Individual and states rights are why we have a republican type of government. To stop the tyranny of the majority.

Iriemon--I didn't reply to several of your posts, because they don't make sense. You have never been about to refute what Reisman said or what he meant. I have gotten tired of posting quotes supporting my position and what Reisman wrote. There is no need to repeat them. Just cursor back and read them again. I am done with you and your other troll.

 

My posts make perfect sense, thanks. The reason you've dodged them should be obvious to anyone following this thread.

You have now conceded, despite your OP and after scores of pages, that a marginal $100 of additional income has far more utility to a starving man than to a billionaire.

Given that, it makes perfect sense to tax that marginal $100 of additional income at a higher rate of tax on the billionaire than the starving man. As you have conceded, it produces far more utility to the starving man.

Thus, contrary to the assertions in your OP, you have conceded that a marginal increase in income of a specific amount does in fact have far less utility to the billionaire, and that fact does indeed justify a higher tax rate on the wealthy.

You don't respond to my posts simply because you simply have no reasonable argument to counter it.

 

I "conceded" that the first time that specific situation came up. Objective utility of course or some would call it "actual" utility. That the $100 does not have much utility to a rich man is obvious. A billionaire would consider a much much larger marginal unit. No matter what you believe as wealth increases the marginal unit considered will be larger in value, and the MU will increase. If you want to use $100 as the MU, the poor man will like it, the rich man will not consider it.

No skewed marginal utility using a small Marginal unit will ever justify a higher income tax on the rich man, even though it is quite justified to charge him a much higher rate.

I have given you irrefutable information about marginal utility, you have simply chose not to accept it. We do not need to use MU to justify income tax, period.

Now if you want to read anymore support for my position cursor back to earlier posts and quotes I have made. I see no purpose in re re re reiterations of quotes. For the last time, accept it or not. I could care less. Arguing over it is trolling.

1. As previously stated, the law of diminishing marginal utility is perfectly consistent with the fact that man’s need for wealth is limitless. It is necessary to stress this point in view of the misconception spread by Galbraith that increasing wealth, and the consequent fall in the marginal utility of a unit of wealth, makes the pursuit of wealth progressively less important.
2. Of course, if one considers a very narrow type of good, such as bread, say, it is possible to imagine additional units beyond a point being of negative utility, and, therefore, a larger supply being of less utility than a smaller supply. This would be the case, for example, if the additional units either had to be eaten by people who already had all they wanted or else would simply rot and impose costs of removal and cleanup. But, for reasons explained earlier in this section, it could certainly never be the case that all or most goods, or, therefore, wealth in general, could fall into this category.
3. Furthermore, it should be realized that the very process of increasing the amount of wealth that is available to the average member (note the singularity of member) of any society entails the opening up of new uses for additional wealth, which has the effect of increasing the marginal utility of additional units of wealth.
4.The opening up of new uses for wealth occurs because essential to the ability to increase the supply of wealth is scientific and technological progress, which makes possible not only improved methods of producing goods of the kind that already exist, but also brand new kinds of goods. Thus, for example, the invention of the electric motor and the internal combustion engine, which radically increased our ability to produce and enjoy wealth, did not result in our sating ourselves with a vastly increased production of such goods as candles and oxcarts. On the contrary, as part of the same process of improvement, these inventions were accompanied by the invention of the electric light and all the electrical appliances and, of course, the automobile. In this way, increases in the ability to produce raise the marginal utility of additional wealth along with providing it.
5. Thus, the effect of a growing ability to produce is not only more wealth, but also a higher marginal utility of the additional wealth in comparison with what it would otherwise have been (if somehow the additional wealth had been able to come into existence without such technological advances). And, as these examples imply, the effect of a growing ability to produce is a tendency toward an increase in the size of the marginal unit of wealth, as well.
6. This last point requires elaboration. The size of the marginal unit is never something fixed and immutable. It is always a matter of context, and the context is always the circumstances and conditions with which the individual is confronted.
7. As von Mises once said in a discussion with the present author, the marginal unit is whatever is the amount under consideration.
8. As people grow richer, the size of the marginal unit tends to increase. Not only do they deal with things like automobiles instead of oxcarts, but richer people deal with Cadillac- or Mercedes-level automobiles rather than Chevrolet- or Toyota-level automobiles. When differences in quality are considered, a house, a suit or a dress, a restaurant meal, practically everything, tends to be a larger-sized unit of wealth for a richer person than for a poorer person. When this is taken into account, it becomes clear that it is a great mistake to assume that as wealth increases, the utility of the marginal units actually dealt with diminishes. On the contrary, the utility of these units actually increases! Unit for unit, a Cadillac has a higher marginal utility than a Chevrolet; a large, luxurious house has a higher marginal utility than a small, modest house; and so on. (Keep in mind he is talking marginal utility, not actual utility)
9. Furthermore, the fact that the utility of a marginal unit of wealth of given size 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 the marginal utility of a unit of wealth of any given size more and more approaches zero, while what we deal with more and more is progressively larger-sized units of wealth. We want to be in a position in which the loss of the wealth represented by $10, say, is absolutely unimportant to us; better still, in which the loss of the wealth represented by $100, $1,000, or $10,000 is absolutely unimportant to us. The loss of wealth represented by $10 will be unimportant to us when we are rich enough to afford spending $50 or $100 for a single fine meal rather than $10 for a whole day’s food—when, in other words, $50 or $100 replaces $10 as the representative of a marginal unit of food. The loss of $1,000 will be unimportant to us when we can afford to spend $50,000 for a second automobile, perhaps, rather than just $1,000 for our one and only ancient used car. The loss of $10,000 will be unimportant to us when we can afford to spend $1,000,000 for our second or third home rather than just $10,000 for our one and only small used trailer. Thus, we rationally want more wealth in order to be able 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. ​

I have posted all the information you need. And I don't understand your insistence to use skewed marginal units for a rich man. My arguments are not only reasonable they are supported by a renowned economist.

Goodbye!

 

Good for you.

You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

You've made this baseless conclusion before, and here you are again making the same baseless conclusion.

What you've failed to do is address the argument or explain why (which is obvious).

If, as you have now conceded, the MU of $100 in marginal income is far greater to the starving man than the billionaire, why wouldn't it make more sense to tax that $100 in marginal income at a higher tax rate for the billionaire?

You're just trolling and dodging. You've already conceded that $100 in marginal income has far greater utility to the starving man than the billionaire.

What you've failed to do is address the argument or explain why this conceded fact does not justify a higher rate of tax on $100 in marginal income for the billionaire as opposed to the starving man.

If, as you have now conceded, the MU of $100 in marginal income is far greater to the starving man than the billionaire, why wouldn't it make more sense to tax that $100 in marginal income at a higher tax rate for the billionaire?

The answer, of course, is of course it makes sense for the billionaire to pay a higher tax rate, as that $100 in marginal income has far greater MU to the starving man.

But you could never admit you're wrong. Which is why you dodge and troll and reiterate baseless conclusory assertions.

 

The argument against it is simple, there is no valid argument for using MU justify the tax. WE DON'T NEED AN EXCUSE TO USE PROGRESSIVE TAXATION. Especially since using a very small marginal unit for a rich man is skewed use of the marginal unit. I could as well say, "people whose forum screen name starts with an "I" is no less stupid then trying to justify a high tax rate because a $100 marginal unit, which the rich man will never consider, as justification. If you can't understand that I feel sorry for you.

I don't need to dodge, I have posted everything that will ever be needed by a person who can think will need about the subject of Marginal Utility and about needing no excuse to tax a rich man.

I am curious though, why do you believe we need an excuse for progressive taxation? Isn't it enough that the rich get more advantage from our infrastructure sufficient?

 

I have made a more than adequate argument that the marginal unit increases in size with additional wealth and that marginal utility can increase as well.

I have also made a reasonable argument that attempting to use a very small marginal unit in any study trying to show marginal utility diminishes with wealth skews the entire issue.

I have also made a reasonable argument that we don't need an excuse of marginal utility to justify progressive taxation.

What more argument do you want? Or do you just want to argue?