the world has a finite amount of money, and for a billion dollars to be in reserve, then that billion dollars has to not be available to anyone else, say, people who would need it more than Apple needs it.
you can't have rich without poor, you can't have capitalist America without immense eastern poverty.
Do you think Apple has a big warehouse someplace with billions of dollars in cash sitting on neat little pallets?
No, Apple puts their money into financial institutions of various sorts. Much of it I'm sure is investments of some sort, but even if it was merely into CDs and savings accounts, that money is available to other people.
Obviously you don't understand that banks are businesses, or perhaps, don't understand how banks make money to pay for their buildings, employees, and ads on TV. Well, I'll tell you how banks money. They don't charge you to hold your money in them, they pay
you in interest. Magic? The government printing money? No, they are simply giving you your cut of the profit they make off of the money you've deposited with them. Ever heard of a bank loan? They're loaning out the money deposited with them by you or companies like Apple. Those loans allow other people to buy houses, cars, start businesses, or whatever else.
Fun fact: Apple actually keeps a lot of their cash reserves overseas. It's not just rich Americans getting loans from banks with Apple's money, but people all over the world.
the people who bought the stuff?
Only if they bought the stuff for more than it's worth. Here's another free primer basic economics. In the free market, people buy things for what they are worth, or less. How profound! I'll say that again. People buy things what they are worth, or less. They do this because nobody buy things for more than what they're worth. If somebody is willing to pay for it, it's worth that much money or more, or they never would have bought it. Different people have different ideas about what stuff is worth what price, which is where demand comes in, but the beauty of the free market is that everyone is happy with every transaction.
You seem to be under the impression that Apple or any other company can set their own prices, but this is simply not true. Apple could try selling the iPhone at a price of $10,000. No doubt, a few people might buy one, valuing them at that price, but with so little demand, Apple can't make any money selling just 3-4 iPhones, and so they can't sell them at that price. Apple could try selling the iPhone at $1. No doubt, a great many people might want to buy one at that price, because for a great many people that's a steal. Apple would be hemorrhaging money though, just in shipping costs, forget labor, manufacturing, materials, and R&D.
Apple needs to sell the iPhone for enough of a price to pay for their costs in producing it, with enough profit leftover so it was a worthwhile enterprise. Apple still needs to find a market for their product though, and for that they need to find a balance between supply and demand, cost and price. If Apple does a good job at this, people line up for hours to buy the iPhone at the price Apple offers it, and Apple can move enough units to make a nice profit. The customer is happy because the iPhone gives them value they didn't have before. Perhaps it's part of their entertainment hobby budget for the year, because cash is boring and stuff provides them with amusement. Perhaps it lets them do their work more efficiently, thus saving them time, money, and energy, so they can be more productive for less. Perhaps it allows them to stay in touch with their families better, or just look cooler to their friends. Whatever people's motivations for buying the iPhone, the iPhone gives them that value.
More generally, if somebody is willing to part with $1 for an item, surely the item they are gaining is worth at least $1 to them. Nobody's forcing them to spend their $1 on the item, so they believe it is worth it. Another person may think the item isn't worth $1, so they won't spend their $1. But nobody is hurt by the transaction so long as both parties agree to it willingly. The fact that the person selling the item was able to make the item for less than $1 does not make the item worth less than $1 to the person buying it. A company and consumer can both have different ideas about a product's value just as two consumers can have different ideas about a product's value.
if Apple makes a profit from selling you something, then that profit goes from being your money, to Apple's money. You get your thing, Apple gets it's money, Apple gets the better deal as it sold it to you for more than it cost to make and ship (that's what profit is).
So if Apple does this to millions of people, then keeps that money for itself and doesn't spend it, then that money isn't being spent and circulated, it's waiting in a pile until Apple needs it.
here's the analogy for the world.
(because there is a finite amount of money, which, Jack, is relevant when such large numbers are being thrown around)
So if the world has for example $100, and Apple keeps $1 of that, not ever spending it, then the world only has $99 to go round.
People are poorer, when other people become richer!
That's just it, Apple is spending their money all the time. They spend it on the convenience of a bank account, so they don't need to have their own vault full of cash. The bank is making money off of Apple's deposit, the people getting loans from the bank are making money (or value) from whatever it is they're spending the loaned money on, and at the end of the day, everybody involved is richer. Apple is
not sitting on a pile of cash, neither is the bank they put their cash into, and neither is the company or person who takes out a loan.
In the process, Apple makes more money off of interest, the bank makes more money off of interests, and the person getting the loan makes money off of the loan. Of course, there are risks. The person taking out a loan might use the money poorly, and not make a profit. The bank might not get the money back that they loaned out, when the person defaults. Apple, at least, has its deposits insured by the government. The risk is always furthest away from the person depositing their money, but so is the potential rewards. The person taking out the loan might start the next Apple Computer in their garage, and the bank makes a greater profit off of Apple's deposit than Apple gets back in interest on their account.
But again, nobody is being hurt by this, in fact, all three parties are gaining from it. You're right that there's a finite amount of money in the world, but it's continually growing because value is continually growing. Money is a representation of the value of human energy. Why is a bank giving money to somebody in exchange for interest back? Because the bank recognizes that the person taking the loan will put in energy into turning the money loaned out into more money. Apple could do this themselves, investing in individuals and companies directly, and they do sometimes with some of their money, but Apple doesn't want to be in the banking business, so they let a bank do that for them much of the time. While makes make their money off of human energy put out by the people they loan money to, Apple prefers to put their own human energy into creating new technologies. Look at the constituent parts of an iPhone, the raw materials taken from the ground. They are worth less in the ground than they are arranged neatly into a smartphone. Apple creates value, creates money, out of those materials by investing human energy through labor, creativity, and research.
sure,
you spend $500 on a mobile phone, mobile phone seller had to pay $200 to manufacture it, mobile phone seller is $300 richer.
mobile phone seller puts that $300 in a bank account for 20 years...
You're leaving out a few details.
You spend $500 on a mobile phone that's really worth $800 to you because it would cost you $800 to make what only costs them $200 to make (and realistically, probably a lot more than that). You're $300 richer at the same time Apple is $300 richer. Apple puts that $300 into a bank account paying 1% interest. The bank loans that $300 out to somebody else for 3% interest. That person takes the $300 and starts a business, soon becoming $300 richer. They pay back the bank, the bank gives Apple their cut.
You have gained $300.
Apple has gained $303.
The bank has gained $6.
The new business has gained $291.
By buying a phone for $500, you've created value worth $900. A bit simplistic, and the numbers are entirely made up (no more than yours), but this is how the economy grows. Good thing, too, since new babies are being born every day, and they start off broke. If money was finite and static, which is just another way of saying if value was finite and static, every generation would be poorer than the last just because population keeps increasing. Clearly this isn't the case, because we have iPhones now and cavemen didn't.
The world's wealth can't increase Jack.
as an aside I really wish you wouldn't associate Hugh Laurie with your right wing capitalist dillusions.
Hugh Laurie is a believer in capitalism. I know this because he's got a job. Also, funnily enough, his job is to increase the world's wealth. He does this through entertainment, an exercise of human energy that people are willing to pay for because it has value. Every day he shows up on the set of House M.D. to read his lines in front a camera, he creates more things for people to buy, and more opportunities for companies to advertise their products to people spending their time and money to watch him on TV. Thus he is contributing to not only the employment of everyone working on his show, but the employment of everyone working at companies that advertise on his shows, and the employment of local TV stations carrying the show, and the employment of people who build TVs and DVD players, and the employment of the people who invent new TVs and mediums to record and play back what's on TV. Some of those people are also capitalists who dig rocks up from the ground and turn them into other things, things that have more value to people than rocks in the ground.
Gold gets its value directly from how rare it is, not by how heavy it is. so if you suddenly found a gold mine tomorrow that doubles the world's amount of gold. Then nothing changed, it's just less rare so all gold is worth half as much.
You now have 50% of the world's gold, and it's still worth what 50% of the world's gold was last week, there's just more.
using your theory we could just print more money to solve all the world's problems.
You seem to have a grasp of supply economics, but you're missing out on demand. Supply on its own is just as irrelevant as demand on its own. When you put the two together, then you have value.
You need to ask yourself why somebody would dig up enough gold to halve the value. They're not going to do it if it's not worth it to themselves. You also need to ask yourself why somebody would take into consideration the value of anybody else's share of the world's gold. They simply wouldn't, nor should they. The reason we have people digging up gold, or anything else, is self-interest. But that's only the supply side.
Why are they digging up gold? Because there's demand, there's demand for more of it than there is right now, that's why gold is so valuable. If somebody can invest human energy into creating more value for themselves, they will do so, whether that means digging up more gold, or designing and building iPhones. Because the fruits of other people's labors add to their value, it keeps all of us working to keep up. That's how you get competition, that's how you get efficiency, that's how you get iPhones only a few short decades after the first semiconductor computers were invented. But again, that's only the supply side.
When supply grows, if demand doesn't keep up, prices drop. It's why so many people can afford the things today that were luxuries of the very rich not so long ago. This is a good thing because people need to come up with new luxuries for those who can afford to buy more than they are, and improves the quality of life for everyone in time. When supplies of basic commodities increase, and prices come down, people also figure out ways of doing new things with those commodities, that would have been impossible before. There was a time in history when aluminum was worth more than gold because it was so rare. Now look at how many things in our lives is made from aluminum, things that many of us would say we can't live without. Yes, we would survive I'm sure, but it would be only survival, compared to what we know now we can have.
Yes, supply has grown, and the value of those materials with greater supply has dropped, in relative terms, but look now at all the increased demand to balance it out. If you were to use a time machine and bring somebody here from the past, he would think even the poorest of us were richer than emperors. Would you argue with him and say that the world's wealth has not increased? He would think you are mad. You are.
So somebody comes and digs up as much gold as we have today, and halves the price. It would be a short-lived dip because people would quickly find new ways to use up those riches. The person who dug up the gold would be quite wealthy indeed, but each of us would benefit from the new things created from it all. Realistically, the price would go down to quite under half, because this is not some linear thing. You forget demand. If this incredible gold mine suddenly flooded the market with gold, it would far outstrip demand, and the value would crash into practically nothing until demand could build back up again. Which is why I told you to ask yourself why somebody would dig up so much gold. They wouldn't, not all of it right away. They'd bring it out slowly enough so prevent a crash, and allow for new demands to meet up with supply. It's like diamonds, really. Diamonds are ridiculously common, are constantly losing value, but the cartel that owns the mines ensures the market is never flooded.
I just think wealth should be spread more evenly, and I'm not sure how you do that but surely that's not something you can disagree with.
All I know is that everyone can't be rich at the same time.
It is absolutely something somebody can disagree with. Look at the communist countries from history and modern times, and compare them to capitalist countries. Who is more productive? Who has the higher living standard, even among the poor? It's no contest.
Capitalism, if it is fairly carried out, allows everyone the opportunities to raise themselves up higher, through the investment of human energy. There will always be poor, and there will always be rich, and hopefully plenty in between. Because human wealth is constantly increasing, the poor today look like the rich of yesterday, and the poor tomorrow will look quite rich. Capitalism allows the poor to not simply rise up to the average, but far exceed it. Communism simply lowers the average down to the poor.
Not everyone can be rich at the same time, but everybody can have the chance to become rich. Under communism, which is exactly what you're advocating here, everybody will be poor at the same time.
If you don't like capitalism, too bad. You can ignore capitalism and be homeless and unemployed, depending on the charity of others. But there's no alternative other than a post-scarcity society where energy, work, and materials are infinite. Everything else is the veneer of politics trying to dress up the realities of supply and demand. There will always be those who can afford to buy something at a higher price, and they will always be the ones to get it first. If you outlawed money, and assigned everyone the barest of necessities, there would still be enterprising individuals who are capable of getting more, and they will do so because it feeds their ego, gets them sex, and provides them with the status they desire.
Since you cannot kill capitalism as long as scarcity exists, all you can accomplish is oppression and demotivate people wanting to succeed. Good luck with that. There's a reason even communist countries have all become capitalist.
TL;DR
You need to understand economics before you can debate economics. You don't understand demand, how banks work, or what motivates people to work hard. Take micro- and macro-economics 101 at your local community college and then come back to us.
