If a car costs $40,000 and you consider $40,000 to be a typical wage for someone in manufacturing then a car generates one man year of work because money is the convenient means of exchanging labor and goods.  That man year is divided up among many people but it can't exceed the total.  At least that is the way I see it.

In the old days you could always figure as a rule of thumb that about half the cost of a manufactured product was material and the other half was labor and overhead including taxes.  Now of those materials that make up the half, they also follow the same rule, half material, half labor. And so it goes until you get down to the mining company and then a portion goes to the holder of the mineral rights.  Only one entity makes much money doing this, the government because they get to tax everything and everyone at every stage of every little nut and bolt and piece of mineral ore that goes into it.

And to make it even more meaningful (and complicated), maybe you should also consider the revenue from the fuel, tires, oil, replacement parts the car uses (and associated taxes), the license and insurance fees, the insurance, loan, shipping......and the ICEE you stop and buy on your drive home!

I have a feeling that the $ 40,000 car might well create $ 80,000 to $ 100,000 worth of revenue over it's lifetime.

Yes, you guys got it....
That is what I am trying to figger out.

Let me try this anology:
I buy an apple seed for a dollar.
This is my first transaction of this endeavor.
A buck.
I buy a shovel, water bucket, etc, to plant it.
Through its early non producing years, tho not creating revenue, I still spend on it.
But, the first cost was a buck.
Now it matures and gives crop.
I hire help to harvest, etc.
We sell it at market, etc.
Everyone that helps move that apple to the point of consuming it, prospers from it, my buck....
It gives greater yields, more folk to move the crop to consumption, and they all spend that earnings on things they need.

One thing is needed to create this revenue stream, a commodity, not a scheme, something real and if agreed upon value.
Once that is established, it can almost become self sustainable as long as nothing is done to restrict its flow....

You see what I mean?

I would love to work up a number to see just what it is we are looking at  

Yes Dave, absolutely!
Love the drop of oil analogy, perfect!

Maybe a two prong chart, pre spending versus production spending and start our revenue stream there.
What I am trying to establish is that a revenue stream needs a real product as it root or foundation to create revenue.
As some already talked about the car producing revenue via taxes, insurance, etc, but that is not a real product of commodity but a scheme, like betting or gambling, you don't crash the car, which might include drinking at a bar then driving home, another business that benefitted off the car, so to speak

A few years ago we had a seminar at our office, and one of the things that scared me was when he said that 80% of the US economy was "service".  That is frightening to me, as it means that only 20% of folks are actually building and selling something.  So 80% of the money is moving around providing haircuts, fingernails, massages, insurance, healthcare, banking, retail sales, lawn mowing, shipping, car repair...maybe even construction (I am not sure all that is included in the definition of service).....and only 20% of the economy is making a produce (growing food, building cars and trucks, building tools, making building products, etc.).

The US became prosperous during the industrial revolution by building products and exporting them to other countries, and we could do it well as we had natural resources available and motivated workers to build the products.  When the ability to utilize the natural resources economically is taken away, and when the factories are moved to other parts of the world and money stops flowing "into" the US.....how does the US stay economically productive?

A "service industry" economy reminds me of the following story:
A farmer had a horse in his field that was a bit neglected.  One day a neighbor stopped by and offered to buy the horse, and it was sold to him for $ 40.  The new owner took the horse home and gave it a bath and a good brushing, and the horse looked much better.  A few days later the original owner drove by and saw his old horse, and decided he would like to have it back.....so he stopped and offered $60 for the horse and it was accepted.  When he got the horse home he trimmed the mane and tail and combed them out.  The other farmer drove by a few days later, and was impressed by how nice the horse looked, and he bought the horse back for $ 90, and he took the horse home and trimmed the hooves and applied polish to them.  A few days later a farmer from the next county saw the horse in the field, and bought the horse for $ 120, and hauled him over to the next county.  A few days later the original farmer drove by, and saw the horse was not around - so he stopped to ask where "their" horse was.  The farmer told him that he has sold the horse to another farmer from the next county.....and the first farmer said:  "You fool - we were making a good living off that horse!"

(Sorry if I rambled.......I can remove this post if it is Off Topic or belongs in the TT).      

Quote:


That's what they did in Cuba. The whole economy revolves around a '57 chevy.


http://talkingpointsmemo.com/gallery/cuba-time-capsule-american-cars

When I was young I lived in a rural area with a nearby town.  My dad sold insurance....he was the only dad among my close friends that worked in a "service" business.  The other dads were crop or dairy farmers, or worked at one of the factories in town (Deming, Mullins, Bliss, Eljer), or they worked in the strip mines.  It was the factories that made the town go......and the town provided services to the factory owners, management and laborers.

The money was brought into our town by the factories selling their product nationally....and internationally.