It's so simple: Income is what flows into the "pocket" and wealth is what's already there. But, when it comes to determining the precise terms in social, labor or tax laws it can be hellishly complicated. So complicated that specialists make a living, to interpret them correctly.
An archaic water-dependent community
Once upon a time, the people of "Water" lived in a barren, hilly countryside from mixed farming.
It didn't rain enough, to grow fields and pastures without irrigation. In particular, the amount was not fairly distributed.
The ways of the hills, managed to pump water from the depths, stored it in large underground caverns and distribute it via an ingenious canal system to the remote settlements. They used the slope and locks to supply the quantity…
Water is treated as carefully as money in Water. It's used in cereals, vegetables and fruits grow and to water their herds. This water is their income. Their wealth is the drinking water, which they store (as well as their crops and animal products).
The ways reserve the right to keep a portion of the water to use it for their privileged activities. For example, for the production of rose oil (which they exchanged for food) ...
There was peace in Water, all lived strictly compliant to the rules...come to two events: after a long drought the central water supply could not deliver enough and the farmers in the plains wanted to build their own fountains...and an innovative cereal farmer, who lived on a canal with a particularly large slope, wanted to build a water mill.
"But we can grind for you," said the ways. "But your slope is far too low, I can produce much more flour per day," said the engaged miller.
"And what will we get back from the local water producers" the wise men put pressure on the innovators...and it happened a complicated discussion about taxes and the use of infrastructure
History shows how easy it can be to organize income. Headache starts with the proper use of wealth, because this references analysis: who does benefit from what…
And this is where reason is often suppressed by ideology…and this is one of the reasons why I think politics need to use much more models and simulate much more and test much more in order of find better explanations…
I better let David Deutsch explain explanation...
