A company (let's call it "Exploitation Inc") identifies a dereliect old building on a contaminated site, which could with a bit of work be reclaimed, cleaned up & turned into flats. This work will cost £20m. Exploitation issue 20m shares, at £1 each, which are bought by gullible investors, obviously, as they are just paying £1 for a little piece of paper! I mean, how much does a sheet of paper cost? A ha'penny, right? Anyhow these people are clearly being kidded by Exploitation into handing over £20m of the money pool from the poor to the rich.
Anyhow. Exploitation refurbish the site and sell the ensuing luxury flats for a total of £50m. This means that the owners of the £1 shares are now being offered £2.50 per share.
Given a constant amount of money in this closed system, identify who has robbed from who?
a) Exploitation have robbed from the shareholders by selling them worthless paper
b) The shareholders are robbing from the people wanting to buy their shares
c) the buyers of the flats are being robbed because we were informed that the site is derelict and hence worthless
d) the building contractors were robbed because the extra £30m added to the site value must have come from somewhere and they were the workers, so it must have been them
e) some other form of robbery took place (explain)
and for a bonus point
f) explain how the £20m originally belonging to the shareholders is now distributed in the closed system, given that there has obviously been no change in overall wealth.
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timeasmymeasure
A Paradox
Date: 2006-01-10 12:15 pm (UTC)Anyhow. Exploitation refurbish the site and sell the ensuing luxury flats for a total of £50m. This means that the owners of the £1 shares are now being offered £2.50 per share.
Given a constant amount of money in this closed system, identify who has robbed from who?
a) Exploitation have robbed from the shareholders by selling them worthless paper
b) The shareholders are robbing from the people wanting to buy their shares
c) the buyers of the flats are being robbed because we were informed that the site is derelict and hence worthless
d) the building contractors were robbed because the extra £30m added to the site value must have come from somewhere and they were the workers, so it must have been them
e) some other form of robbery took place (explain)
and for a bonus point
f) explain how the £20m originally belonging to the shareholders is now distributed in the closed system, given that there has obviously been no change in overall wealth.
H