What’s it called if I buy something like a sandwich, then consume it, and the net worth of society has now shrunk by 1 sandwich? Versus buying something that keeps its value.

Question

Maybe a better example would be a country getting leveled in a war. All of the money is still there, but now everyone is poor and has no net worth. How does that work?

It seems kind of like losing that amount of money, even though we didn’t?

In: 3475

Answer 1

You’re talking products vs commodities.

Commodoties are what products are made from. You also have services, which connect the two.

As a product, the sandwich is replenished again and again. It’s value comes not from what it is, but from what it does: provides tasty, portable sustenance.

The city is the same thing. So long as people (paid or not) rebuild the city to the point that it serves its purpose (to house, employ, and entertain people), it will again generate value. A city is merely densely co-located products and services, which usually require commodities.