Re: how to compare living standards


"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote

In other words, if you build lathes for machine shops,
your output is lathes.
By your definition, those not consumed are invested.
But as a consumer, I don't have much use for lathes.
Do you?


Curiously enough, yes :-)


Maybe definitions are important after all.


Well, the IRS certainly thinks so. A lathe can be defined as a personal
toy, or a business expense, or a capital investment, for tax purposes.

Now let me ask you this: is _inventory_ an "investment"? If I'm in the
business of building widgets, in the hope of selling them to the public, do
I make an "investment" when I build 1000 of them in a batch (because it's
cheaper that way) and carry them as inventory against future orders?

Suppose the widgets are neckties. Does that change the definition?

Suppose the neckties never sell. Does _that_ change the definition?

-- TP


.

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