[HN Gopher] A catalog of wealth-creation mechanisms (2009)
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A catalog of wealth-creation mechanisms (2009)
Author : xojoc
Score : 272 points
Date : 2021-10-06 09:39 UTC (1 days ago)
(HTM) web link (blog.rongarret.info)
(TXT) w3m dump (blog.rongarret.info)
| asimjalis wrote:
| Ron missed an important category. Creating value by entertaining
| people.
| [deleted]
| pjc50 wrote:
| There's a followup: https://blog.rongarret.info/2009/10/wealth-
| production-mechan... - in reply to the first time this was posted
| on HN!
| trgn wrote:
| Since this list is so broad it includes pretty much any
| professional activity, as a counterpoint, compare to Adam Smith,
| who had a lot more rigorous definition, and for who wealth
| creation can only happen when labour is applied to the production
| of useful commodities, or in the market making for such (crudely
| summarized).
|
| e.g. "curing disease" did not create wealth. Instead, he put
| physicians on the same level as house maids and clowns, in that
| they are unproductive in the strictest sense (although still
| necessary of course).
| LeifCarrotson wrote:
| This is a great catalogue of wealth creation mechanisms at a
| societal or global level, but it misses the question of wealth
| acquisition: How does an individual gain personal wealth? There
| are, in my opinion, three fundamental categories:
|
| 1. Create value (this encompasses most of the catalog)
|
| 2. Deplete valuable resources
|
| 3. Extract value from a transaction stream
|
| The idealized engineer creates utility out of chaos. This value
| creation, however, is limited in its ability to cause them to
| gain wealth: They typically sell their time during which they
| perform this activity for a salary. A company that employs an
| engineer and pays him $100,000/year might make many times that
| amount with the products that he designs.
|
| An oil company, coal mine, or non-sustainable farmer owns some
| land rights and takes out resources. The things they remove are
| valuable, but the profit does not come from the creation of the
| resource - they already existed. This category also applies to
| other activities which might not actually take a resource away
| but which harm the commons.
|
| There are some activities which are useful, but where
| practitioners make far more money than the actual value they
| create. Someone who organizes and who employs many workers and
| sells the sum of their output is in a position to profit from the
| difference in that transaction. Jeff Bezos might hypothetically
| be smarter, luckier, stronger, and overall able to pack more
| boxes than any of his warehouse workers, but he's still human -
| he's not gaining wealth to the tune of more than $13,000,000
| dollars per hour while his employees are making $18 an hour
| because he's creating about a million times more value. Instead,
| of the three categories, he (and anyone else who makes more than
| approximately a standard deviation above the median GDP) is
| primarily extracting more value.
|
| My personal problem is that I take particular satisfaction in
| creating something valuable. I find resource extraction to be
| unsatisfying to the point of being demoralizing, and I find
| leveraging power to extract more value than I think I'm due to be
| shameful.
| imtringued wrote:
| Start out from a very simplified scenario: You do all work
| yourself.
|
| It's pretty easy to see why this is inefficient. You need to
| duplicate equipment and experience. You need to travel long
| distances. You cannot work 24/7. Some work needs more than one
| person.
|
| Since labor is the fundamental building block of a society you
| are better off if you can do something with less labor. You let
| someone else do the work because they can do it in less time
| than you can.
|
| Jeff Bezos isn't rich because he is creating more value or
| wealth, he's rich because he is delegating work to lots of
| people. The CEO of a company is basically a monopoly no matter
| how big the company is.
| pitaj wrote:
| > he's not gaining wealth to the tune of more than $13,000,000
| dollars per hour while his employees are making $18 an hour
| because he's creating about a million times more value
|
| He gains that wealth because he took the risk and invested his
| money into a company that provides a huge amount of value to a
| massive amount of people. A large amount of people now
| increasingly value his company highly, believing that it has
| good future prospects.
|
| He is extracting practically nothing from the company itself or
| the workers. His wealth increases only because people in the
| market value the company highly, and he owns a large portion of
| the company.
| LeifCarrotson wrote:
| The company itself is performing things that are valuable,
| but he's not doing those actions personally. Of the three
| types of wealth acquisition, making money from an ownership
| position is extraction.
|
| If the workers don't show up to create value for him and for
| the company, they don't get paid. They're creating some value
| by packing boxes, that contribution might be worth $25/hr,
| but they've only been able to negotiate $18/hr of that value
| creation. They're probably handling goods worth tens of
| thousands of dollars per hour where that wealth is exchanged
| between end consumers and manufacturers, but they're not
| charging a commission to the buyers based on a percentage of
| that transaction.
|
| For Jeff, though, he's not personally adding value to the
| company in proportion to his personal contributions of labor
| or ideas or memos. Instead, because of his ownership of
| approximately 10% of the company, he's a dead weight on
| transactions regarding the other 90%. He extracts some of the
| money moving between those other people on the market.
|
| I admit that there's definitely an element of risk that's not
| well covered by this simple three-category model, but I
| question whether taking a risk from a position as a VP of a
| hedge fund (another primarily extraction-based operation)
| morally ought to have an upside worth $200B.
| pitaj wrote:
| > If the workers don't show up to create value for him and
| for the company, they don't get paid. They're creating some
| value by packing boxes, that contribution might be worth
| $25/hr, but they've only been able to negotiate $18/hr of
| that value creation. They're probably handling goods worth
| tens of thousands of dollars per hour where that wealth is
| exchanged between end consumers and manufacturers, but
| they're not charging a commission to the buyers based on a
| percentage of that transaction.
|
| Or their contribution might be worth $16/hr. Value is
| subjective. If they agree to work for $18/hr, then that
| work is worth at the most $18/hr for them. They do charge a
| commission to the buyers by proxy. Sure the company does
| some averaging across time, which is valuable to workers
| and both sellers and buyers on the marketplace. It makes it
| much easier for everyone involved. Do you really think
| workers want to get paid based on commissions? Do you think
| someone moving a box containing something priced $1000
| deserves to be paid more than someone moving an identical
| box containing something priced $1?
|
| > The company itself is performing things that are
| valuable, but he's not doing those actions personally. Of
| the three types of wealth acquisition, making money from an
| ownership position is extraction.
|
| Extraction from what? What does extraction even mean? This
| applies to any investment or holding any stocks. Investment
| benefits the company (and I guess the workers and consumers
| by proxy) by providing resources for companies to develop.
| It's a two-way thing: investor takes on risk by giving
| money to company, company promises to give investor some
| amount of profit in the future. If anything, investment is
| creation of wealth from risk.
| ggrrhh_ta wrote:
| One can legitimately (within the set of rules we give
| ourselves as a society) possess and earn a lot of wealth
| without actually creating most of that value. If all the
| employees - en masse - could not go any more to work, would
| the company still be providing that huge amount of value?
| Probably not. At the end of the chain there is always a group
| of people creating the value through work. That doesn't mean
| that the wealth is not legitimately earned even if that
| person -alone- did not create million times more value.
| pitaj wrote:
| Value is subjective. Wealth is not created by labor, but by
| mutually beneficial consensual trade.
| [deleted]
| Borrible wrote:
| Fasten, widen and simplify communication space. Entertain
| communicants for free. Boost individuality and ego of
| communicants or tweak according to demand. Sell the inflated
| souls to the highest bidder.
| silicon2401 wrote:
| > fasten
|
| This should be speed up or accelerate: https://www.merriam-
| webster.com/dictionary/fasten
| Borrible wrote:
| Thank you, much appreciated. Most people are reluctant to
| improve non-native speakers. Which I personally think is a
| pity.
| streamofdigits wrote:
| I am surprised education does not figure more prominently in 9.
| In a sense all wealth is created through education (a newborn
| child knowns nothing about "wealth").
|
| NB: Education is not just the "provision of information" or "help
| with figuring out the rules" (although there are aspects of
| both).
| lisper wrote:
| Author here. AMA.
| roussanoff wrote:
| US economic historian here. The idea that the US government
| funded the construction of the first Transcontinental Railroad
| and Panama Canal to trade with China is very, very weird.
|
| - 1850-1890 was a period of high protectionism, highest tariffs
| on imports in the US history.
|
| - A good approximation of share of traded goods in the railroads
| would be the share of imports+exports in the GDP. Together,
| exports and imports were not more than 15% of GDP. Source:
| https://www.nber.org/system/files/working_papers/w4710/w4710...,
| Table 3.
|
| - railroads transported a lot of agricultural products and also
| passengers, and were hugely profitable from that. I doubt they
| would recover any cost by transporting porcelain and whatever
| other goods China exported at the time.
|
| - "But that answer is wrong, as can be shown by examining
| historical records of the time." - citation needed.
| hinkley wrote:
| 1853 is when Admiral Perry showed up in Japan with gun boats
| and said "You _will_ trade with us. " Whatever the confusing
| economics were of trade with East Asia, we were not only active
| over there, we were being rudely pushy about it.
| asdff wrote:
| If trading opportunities were the answer it would have been
| reported as much at the time imo. Here is the justification
| from the U.S. house of representatives about the project at the
| time, in 1856:
|
| "The necessity that now exists for constructing lines of
| railroad and telegraphic communication between the Atlantic and
| Pacific coasts of this continent is no longer a question for
| argument; it is conceded by every one. In order to maintain our
| present position on the Pacific, we must have some more speedy
| and direct means of intercourse than is at present afforded by
| the route through the possessions of a foreign power" (1)
|
| The reason seemed to be just geopolitics rather than trading
| opportunities. I'm curious if you know what route they were
| referring to in this quote that routed through a foreign power?
| An oversea route maybe? In 1856 we had territory coast to coast
| already so the caravan routes were within our possessions.
|
| 1.
| https://en.wikipedia.org/wiki/First_transcontinental_railroa...
| roussanoff wrote:
| I am not that familiar with the history of railroads, but I
| will speculate:
|
| - take the railroad as far west as possible, then a
| stagecoach (expensive, slow, uncomfortable). The land route
| was created after the Gold Rush:
| https://en.wikipedia.org/wiki/California_Trail
|
| - ship to Panama, cross by land in Panama, ship from Panama
| to California (cheaper, slower, risk of disease like malaria)
|
| - ship around South America. Yep, all the way to Antarctica,
| through Magellan Strait. (even cheaper, even slower, risks
| from travelling by the sea). This route seems crazy if you
| look at the map. However, for goods, it was very much in use
| before Panama Channel was built. Sea is so much easier than
| land.
|
| I am not sure what "foreign power" this quote refers to
| though. Panama? Chile? Maybe you could also go through
| Mexico?
| _dain_ wrote:
| Magellan strait
| _dain_ wrote:
| They had to sail around the bottom of South America.
| lisper wrote:
| For the record, the idea that the transcontinental railway was
| built to link the east coast with China was not mine, it was
| Donald Gibbs's.
| practicallytru wrote:
| That's more or less how the railroad has since served the
| {Chinese-American, } people who worked so hard to build it. h
| ttps://en.wikipedia.org/wiki/First_transcontinental_railroa..
| .
| ravitation wrote:
| That seems mostly irrelevant, aside from maybe providing
| credit. The way in which you "co-opt" it in this piece is not
| as some questionable hypothesis, whose veracity is
| unimportant - which seems to be your intent based on this
| comment and the rest of the actual piece. It's hard to see
| how you are not explicitly endorsing this hypothesis when you
| have unquoted lines like "but that answer is wrong, as can be
| shown by examining historical records of the time." You are
| not saying that Donald Gibbs thinks this is wrong, you are
| saying you think it's wrong.
| lisper wrote:
| Yes, that's a fair criticism. If I were to rewrite this
| article today I would try to make this clearer. I think at
| the time, having recently seen Gibbs speak, I found his
| argument compelling. But I clearly could (and should) have
| done a much better job communicating it. Mea culpa.
| ravitation wrote:
| Also, for the record, I really enjoy/get a lot of value
| from your writing (if I didn't I probably wouldn't have
| criticized this tiny part of it).
| lisper wrote:
| Thanks for the kind words. And I always appreciate
| constructive criticism. It's the only way to improve.
| SilasX wrote:
| Your post is written on a hard drive, not stone. You can
| still correct the error.
| MkNape wrote:
| I've always wondered if one of the reasons was to protect the
| Union. Would be a lot easier to prevent states from seceding,
| and defend US borders when you can quickly transport soldiers
| (plus equipment, food, etc.) to where they're needed.
| roussanoff wrote:
| I don't think there is a single answer to "why the US built
| railroads", but both the railroads and the Eisenhower's
| Interstate Highway System certainly had something to do with
| the military needs.
| myohmy wrote:
| I would imagine so. The CN railroad was specifically built to
| transport soldiers from eastern Canada to BC to defend
| against American machinations. (Not for expansion, nope, no
| way, we didn't want Alaska anyways!)
| Synaesthesia wrote:
| Well that's the government intervening in the economy
| (protectionism) to support local corporations.
|
| BTW you should check the work of economist Michael Hudson, I
| think he's the foremost expert in this realm.
| somedudetbh wrote:
| Not a historian but possible other weird thing:
|
| "(Bonus question: what did the U.S. give to China in exchange
| for its china?)" "(the answer to the question I posed above
| about what the U.S. traded to China in the 19th century is
| "fur")"
|
| My understanding is that in this period, the most valuable
| China->US exports were tea, silk, and porcelain. The USA didn't
| produce anything the Chinese were interested in buying (unlike
| the Spanish, who had had torrents of silver coming from South
| American silver mines), and so British and American traders in
| the Canton System and Thirteen Factories period traded opium
| from British India to China, which of course led to the Opium
| Wars, British control of Hong Kong, etc.
|
| I've never read anything about fur exports from USA to China
| being a big part of 19th century USA trade, but I have read a
| about mid-19th century booming East Coast and European demand
| for beaver pelts.
| pacman2 wrote:
| I don't know about the Panama Canal, but the rest is true
| (mainly UK).
|
| " ... transporting porcelain and whatever other goods China
| exported at the time."
|
| China exported Silk, porcelain and tea like the is no
| tomorrow but did not buy anything. At one point China
| accumulated a huge part of the world silver reserves, sucking
| liquidity out of the western economy. Opium "solved" this
| problem.
|
| It was my understanding that the Opium trade was mainly a GB
| thing. I was not aware that the US was involved.
| cossatot wrote:
| Fur exports from North America to China were the major reason
| for the European exploration of western North America in the
| 17th and 18th centuries, and into the earliest 19th century.
| The Chinese elite used fur pelts to line their robes. Sea
| otter, which has the highest follicle density of any mammal,
| was the most favored (and I believe imperially mandated for
| the highest ranking mandarins) and the pelts were incredibly
| valuable. The Spanish and English exploration of the Pacific
| Northwest was largely done by trade expeditions which would
| trade various goods for pelts with the various Native tribes,
| and then sail to Canton to trade the pelts for Chinese goods.
| The Russians more or less enslaved some of the tribes of the
| Aleutians (the Unangan people) and brought them as far south
| as central California in their trade ships; the Unangan
| hunters hunted from sea kayaks by day.
|
| Both the North West Company (British) and John Jacob Astor
| (US) set up transcontinental overland trade networks in the
| late 18th and early 19th century focused on the fur trade,
| with China being a primary customer for pelts.
|
| I think in the first few decades of the 19th century, Chinese
| Imperial fashions changed and much of this system collapsed,
| although not fast enough to prevent the near-eradication of
| the sea otter population.
|
| A good pop history of the US Overland component is _Astoria_
| by Peter Heller. It is also addressed a bit in more scholarly
| work such as the _Columbia 's River: Voyages of Robert Gray_,
| by J. Richard Nokes.
| thedogeye wrote:
| The answer to the bonus question is opium. In particular the
| Forbes family (not related to the magazine folks) traded
| about 20% of all the opium sold in China during this period
| with the other 80% coming from the British East India Company
| and other UK-based trading houses.
|
| Fun fact, the Forbes family is still one of the wealthiest
| families in America, they own their own massive private
| island called Naushon Island right next to Martha's Vineyard.
| They also have their own family museum in Boston where you
| can learn about their trading history in Asia which I'm super
| eager to visit And the patriarch of the Forbes Family today
| is... wait for it... John Kerry. When Obama made Kerry his
| secretary of state the Chinese weren't super thrilled, they
| have a long memory.
| B1FF_PSUVM wrote:
| (that was interesting, thank you)
|
| > wealthiest families
|
| The role of families in history is sadly under-reported.
|
| I'll bet a lot of interesting stuff would come up if that
| angle were properly mined.
|
| Probably hard to get funding for it, though.
| thedogeye wrote:
| Source for this is a book called Barons of the Sea:
| https://www.amazon.com/Barons-Sea-Worlds-Fastest-
| Clipper/dp/...
|
| Great book if you're interested in America's history in
| large scale drug dealing.
| [deleted]
| peterburkimsher wrote:
| The article is a good summary of typical business models! I also
| learned a lot by trying to answer the _(Bonus question: what did
| the U.S. give to China in exchange for its china?)_ - fur and
| opium.
|
| https://en.wikipedia.org/wiki/Old_China_Trade
|
| The article lists the following: Move, Store, Transform, Farm,
| Build, Mine, Health, Research, Information (Supply/Demand, Law,
| Journalism).
|
| _I 'm pretty sure this is a comprehensive list. Can anyone think
| of anything I've left out?_
|
| Music and art come to mind as not being "useful information" but
| still appealing, because they reflect and enhance culture, which
| brings people together.
|
| As for wealth storage, I heard another list of investment advice
| being told on a Sunday morning: stocks, bonds, and property.
|
| I winced, because I don't trust the stock market (even though I
| do believe that some companies have great potential. Government
| bonds require political stability, which I worry about. Property
| values are destroyed in war or natural disasters, both of which I
| expect are likely to occur in my lifetime.
|
| What could we invest in instead? Philanthropy. We could just give
| it all away! Building guanxi will endure even huge economic
| changes. Laptops and phones come and go, but Hacker News karma is
| forever ;-)
|
| https://news.ycombinator.com/item?id=28004632
| TeMPOraL wrote:
| I was curious, so I looked it up: the missing category is
| _energy_.
|
| https://blog.rongarret.info/2009/10/wealth-production-mechan...
|
| > Producing, storing, converting, and transporting energy is
| what I had in mind as the missing top-level category.
| c54 wrote:
| > Bonus question: what did the U.S. give to China in exchange for
| its china?)
|
| Anyone know?
|
| Suggested here are gold/silver bullion/coinage, unsurprisingly.
| Furs and sealskins. And probably a lot of opium:
| https://en.wikipedia.org/wiki/Old_China_Trade#Finding_medium...
| cushychicken wrote:
| I'd guess cotton, sugar, or molasses.
| mellavora wrote:
| opium
| sudosysgen wrote:
| Silver that the Chinese would buy Opium from the UK for is a
| big one. Without the opium they'd have a surplus of silver/gold
| hence the Opium Wars.
| throwaway4220 wrote:
| He answers it as fur
| amir wrote:
| It's answered in the article: the answer to
| the question I posed above about what the U.S. traded to China
| in the 19th century is "fur"
| andrepd wrote:
| > But historically, the most reliable and the most socially
| beneficial way of making money is to create wealth.
|
| Is it? It seems almost universally true, historically, that those
| with the most money are those which create the least value:
| nobles, landowners, heirs, etc.
| ksdale wrote:
| There are definitely a lot of rich people that don't do
| anything useful, but looking at the Forbe's list, it's
| populated by business people who, regardless of the usefulness
| of their businesses, have worked _a lot_.
| (https://www.forbes.com/billionaires/)
|
| And then there's this -
| https://www.le.ac.uk/hi/polyptyques/capitulare/trans.html
|
| It's a guide for the people running Charlemagne's holdings.
| Naturally the nobility aren't doing the hardest work, but
| they're responsible for at least overseeing the creation of a
| lot of wealth if they want to keep their position.
| Synaesthesia wrote:
| They have not worked hard to earn their billions so much as
| used their power and influence in a clever way to suit their
| own ends. Most wealthly people also started with an
| inheritance.
| ksdale wrote:
| Most wealthy people do not end up with billions, and most
| of them end up with less than their parents had. While I
| don't disagree that they've used power and influence to
| suit their own ends, there's practically not a single
| person on that list who isn't a workaholic. I don't hold
| any of these people in high esteem but in my opinion, it's
| silly to suggest they haven't worked hard. Of course, they
| haven't worked a million times harder than anyone else, but
| they have "worked hard to earn their billions."
| simonh wrote:
| For a transaction to create wealth the two parties must
| collectively be more wealthy than they were before. If they are
| collectively as wealthy then no wealth has been created. Some
| criminal activities destroy wealth in aggregate even though money
| or goods changed hands in a way that superficially resembles a
| trade.
|
| I suspect though that the distribution of money itself between
| people can increase net wealth, because it shifts how that money
| will then be used economically in useful ways. The same $1 in the
| hands of a minimum wage worker might have different economic
| value than if it was in the hands of a millionaire because how it
| is likely to be used in the economy is different. I don't know
| which is better though, will the minimum wage worker pay for
| services that are more beneficial, or will the millionaire invest
| it in a company that creates jobs and provides services? We need
| both things to happen though to some degree, so maybe the answer
| shifts with the economic cycles.
|
| If I buy a coffee and drink it have I just decreased net wealth
| by destroying valuable coffee, or have I increased it by
| transferring the money to somewhere it can do more useful
| economic work in downstream transactions?
| jkhdigital wrote:
| Wealth, as the author defines it, depends on subjective
| valuations. If I value x more than y and you value y more than
| x, then I can give you my y for your x and we are both
| wealthier.
| rrrrrrrrrrrryan wrote:
| > I don't know which is better though, will the minimum wage
| worker pay for services that are more beneficial, or will the
| millionaire invest it in a company that creates jobs and
| provides services?
|
| One way of measuring this is by looking at the "velocity of
| money." [1]
|
| IIRC a dollar spent at a local, family-owned restaurant travels
| 7x further than one spent at a mega-chain restaurant before .
| The restaurant owner might use that dollar to pay their cook,
| who might use it later that week when he gets a haircut to pay
| his barber, who might later use it to buy a coffee, etc.
| Because value is created for both parties with each
| transaction, this is considered much better for the economy
| (and especially the _local_ economy) compared a dollar spent at
| McDonald 's, where it might just go into a bank account and
| stop moving.
|
| I don't have the data to back it up (someone here might?), but
| I'd be tremendously surprised if a dollar put in the hands of a
| millionaire circulated more than a dollar put in the hands of
| the minimum wage worker, or if it created more value in the
| overall economy.
|
| [1] https://www.investopedia.com/terms/v/velocity.asp
| WalterBright wrote:
| > where it might just go into a bank account and stop moving.
|
| Banks don't make money by storing your dollar in a vault.
| They make money by loaning it out. They loan deposits out as
| fast as possible.
|
| People who get the loans don't sit on it, either. It's
| madness to be paying interest on money just to let it set.
| They borrow money in order to promptly spend it.
| bckr wrote:
| The coffee would become cold and undesirable of it were brewed
| and not purchased. The grounds of the beans would lose their
| flavor if not purchased and brewed.
|
| The land the beans are grown on, though, might be used for
| other purposes, including to restore natural habitats and thus
| derisk the whole economy.
| samus wrote:
| The coffee getting cold and the beans going stale are
| inefficiencies that arise because of entropy. The latter are
| true opportunity costs though.
| hinkley wrote:
| Some commodities have more elasticity on the supply side
| than others and that changes the economics. You only have
| so many options with coffee, you have to sell it sooner
| rather than later. Gold bars are easier to store, but also
| more attractive to steal. Other than that maple syrup heist
| in Canada a few years back, we don't usually see bulk,
| perishable goods getting stolen because it's too much of a
| pain. I think they only did it because of the element of
| surprise. Who steals syrup??
| bo1024 wrote:
| Economists use the term "welfare" for this, not "wealth".
| TheOtherHobbes wrote:
| You make a good point. A realistic definition of wealth is
| 1. Everyone is better off. 2a. Nothing of lasting value
| is damaged... 2b. ...*unless* that damage is accounted
| for and explicitly accepted by all concerned parties, including
| those who are not immediately involved in any negotiation.
|
| If you use this definition, very few things that are called
| wealth creation actually create real wealth.
|
| It's actually a stability consideration. Any wealth creation
| which attempts to grow and doesn't follow this definition
| cannot be persistent and stable, because damage will _always_
| tend to exceed the nominal wealth created.
| imtringued wrote:
| >The same $1 in the hands of a minimum wage worker might have
| different economic value than if it was in the hands of a
| millionaire because how it is likely to be used in the economy
| is different.
|
| It's clearly better off in the hands of the minimum wage
| worker. It's funny how people deride governments as central
| planners when companies and their owners are committing that
| very same central planning at a smaller scale. The only
| difference is that the government is much bigger and when it
| isn't then local governments will lick the boots of the CEOs.
| When people talk about trickle down they are basically
| advocating for more central planning. 300 million brains aren't
| good enough, there is no way they could possibly know what they
| want, instead some rich millionaire or billionaire gets to tell
| them what they should want.
| closeparen wrote:
| Government is not just large, it's singular. Three hundred
| million people's preferences are reduced to one policy.
| Whoever is unsatisfied with this policy can pound sand. When
| a company approaches this position it's a monopoly; even in
| market ideology, monopoly is bad.
| WalterBright wrote:
| > It's clearly better off in the hands of the minimum wage
| worker.
|
| Why?
| aqme28 wrote:
| I would argue because the relative utility is higher. A
| higher percentage change in that person's purchasing power.
|
| OP though was arguing that that poorer people will spend it
| better, which might be true as well since the rich tend to
| hoard.
| WalterBright wrote:
| > the rich tend to hoard
|
| Ironically, it's poor people that hoard cash in a can or
| a mattress, not rich people. Rich people invest it. Even
| cash in the bank isn't cash in the bank, the bank
| promptly loans out a _multiple_ of it.
| Aerroon wrote:
| > _It 's funny how people deride governments as central
| planners when companies and their owners are committing that
| very same central planning at a smaller scale. The only
| difference is that the government is much bigger and when it
| isn't then local governments will lick the boots of the
| CEOs._
|
| It's not the only difference. Another important difference is
| that the central planners aren't spending their own money.
| The way they get money is through taxes - they use the threat
| of violence to get people to pay, because government has the
| (legal) monopoly on violence. You can't opt out from paying
| either.
|
| You're not wrong the large companies have the same central
| planning problem. One upside though is that people aren't
| forced to do business with a specific company - they can
| choose a competitor instead. That's part of why monopolies
| are a problem. They have the central planning problem and no
| alternative.
|
| The billionaire gets to tell others what to do because he's
| paying for it. The central planner takes your money and then
| tells you what to do. If you don't comply you go to prison.
|
| Also, the central planning problem does become less of a
| problem the smaller the scale.
| dandare wrote:
| Trade creates value and not just in the way of moving things. The
| law of comparative advantages is mind blowing once you understand
| it
| https://en.wikipedia.org/wiki/Comparative_advantage#Ricardo'....
| [deleted]
| netcan wrote:
| >> It's important to keep in mind that there is a distinction
| between wealth and money...
|
| I think this goes astray here. I think the operative distinction
| is between "wealth" in the abstract "wealth of nations" sense and
| the aggregate of wealth in the "net worth" sense.
|
| The first definition is pretty closely related to value. The
| second is more closely related to the value of assets. If real
| estate, shares, bonds and such have a high market value then we
| have more wealth in the "net worth" sense.
|
| The gross market cap of the education sector is not high, but it
| does generate value, for instance.
| geoduck14 wrote:
| >For those of you coming from Hacker News, I'm on a cruise ship
| going through Asia at the moment.
|
| >posted in 2009
|
| I really hope this guy gets out of quarantine soon
| lisper wrote:
| Funny you should mention that, because 11 years later, this
| happened:
|
| https://blog.rongarret.info/2020/02/the-cruise-that-went-wor...
| jkhdigital wrote:
| > _Wealth_ is a measure of how much stuff people have that they
| actually value for its own sake. Food, housing, clothing,
| shelter, and artwork, are all examples of wealth. _Money_ , by
| way of contrast, is merely an accounting mechanism that humans
| have invented in order to facilitate trade.
|
| I think this is pretty accurate, except the description of money
| as "merely" an accounting mechanism. Trade is facilitated through
| a variety of accounting mechanisms, and money is obviously an
| item in this list insofar as it is the _unit of account_ for
| economic entities that maintain accounting books. However, money
| is also a concrete economic good in and of itself, subject to
| forces of supply and demand much like any other good.
|
| The author correctly states that wealth is derived from
| subjective valuation, so money could be seen as something like
| the "limit" (categorically) of wealth, which aggregates the value
| judgments over all (person x good) combinations.
| imtringued wrote:
| >However, money is also a concrete economic good in and of
| itself, subject to forces of supply and demand much like any
| other good.
|
| There is an infinite supply of money out there for very obvious
| reasons. The USD is primarily a unit of account. The store of
| value function has been delegated to debt. The reason why debt
| stores values is that people promise to provide value in the
| future. Every asset meaning every dollar has to be backed by a
| liability meaning a dollar of debt. The reason for that is
| quite simple. The dollar has no inherent value, therefore the
| net worth of the dollar must be 0.
|
| The medium of exchange function isn't provided by only the
| dollar itself anymore. Nowadays people use a wide variety of
| payment services ranging from bank accounts and credit cards to
| Paypal and the lightning network and of course, the good old
| dollar bill is providing a offline payment service.
|
| The supply of money is unbounded because the amount of promises
| we make and the economy we can create in the process is
| unbounded. What is in short supply is labor.
|
| Simply saving money creates no net real wealth in the economy
| because the money that has to be saved has to be created first
| through debt. Instead, net wealth is created in the real
| economy by the borrower who is using the money for an
| investment. If there aren't any borrowers willing to get into
| debt (=demand for labor is low) but people keep saving their
| money (=they increase the supply of labor) then the interest
| rate has to fall to balance the demand and supply for labor on
| an individual level. If the interest rate is low or negative it
| means there are lots of people who are working but do not
| intend to consume or invest the fruits of their labor and it
| also means there are lots of people who cannot find employment
| opportunities that earn enough to cover their own consumption.
| mojomark wrote:
| > > However, money is also a concrete economic good in and of
| itself.
|
| Just playing devil's advocate... if you're stranded on an
| deserted island with a suitcase full of US $100 bills or
| perhaps flash drives with bitcoin in them, does that provide
| significant concrete value to you in and of itself?
|
| Same question, but this time you have "food, housing, clothing,
| shelter, or artwork (e.g. some songs loaded in your out of
| range phone)"?
| cortesoft wrote:
| There are a lot of concrete economic goods that don't have
| value on a deserted island. Iron ore, gold, or really any
| natural resource that requires a lot of processing will be
| useless on a deserted island.
|
| In fact, the entire point of the "move things" category in
| the article is that things have different value in different
| places.
| imtringued wrote:
| As I mentioned, for your $100 bill there is a liability
| attached to the $100 bill. The piece of paper itself is
| worthless.
|
| The problem is that you cannot reach any of the people who
| are liable and therefore even its notional value has no
| meaning to you.
| dandare wrote:
| Also capital (aka delayed consumption) creates value, under
| specific circumstances.
| zakary wrote:
| Great article. I've always been fascinated by the question "where
| does the value of things really come from?" And this article
| touches on that. Everything ultimately goes back to the
| fundamental ways we create wealth, and how much time and energy
| we expend doing it. The article mentions No.3 as containing most
| services which involve transforming goods. I wonder where do
| personal services like massage, and prostitution come into that?
|
| Or what about friendship or a romantic partner? A husband or wife
| cannot be converted into money but I'd say having one is to most
| people a definite kind of wealth.
|
| You might call these 'emotional services', and group them in with
| art and entertainment in general. I would say this is at least
| different enough from manufacturing to warrant their own
| category. Edit: rewording
| pharke wrote:
| I think #7 should be modified to "reduce suffering" after which
| it will accommodate not just healthcare but any pursuit that
| addresses a person's mind or body. That would include your
| examples of massage and prostitution as well as others like
| therapy.
|
| Friendship and romance would fall under #9 as an industry since
| the goal is to match people with potential friends and
| partners. I'm not sure the 'emotional services' that you
| receive from friends, family, and romantic partners should be
| evaluated as a commodity. To make that clearer, if I
| manufacture something for a loved one or purchase it while I'm
| travelling and then transport it back to them I don't measure
| the value of that action in terms of money and I'd sincerely
| hope they wouldn't either.
| geogra4 wrote:
| As someone who's partner is a therapist I strongly agree.
| It's a very valuable service for those who need it.
| jcun4128 wrote:
| I remember asking in school if you charge more for what
| something was originally worth, how do you not end up with debt
| as a net outcome (bucket of money analogy).
| mellavora wrote:
| There is a telling insight from David Graeber, I think it is in
| his great book Debt.
|
| https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
|
| He starts with the reasonable postulates that economic value is
| a function of desirability and uniqueness.
|
| and then observes that the things which make us the most human
| are by definition shared among all humans, ...
|
| thus essentially of zero economic value.
|
| Of course, he is also arguing against traditional definitions
| of economic value by showing how ridiculous they are, much as
| you point out.
| cowbellemoo wrote:
| I'm a fan of Marx's idea that value is created by labor and
| the free gifts of nature.
|
| https://en.wikipedia.org/wiki/Labor_theory_of_value
| imtringued wrote:
| People definitively value their own work, others may not.
| HPsquared wrote:
| I'm a fan of the Austrian school's idea that value is
| subjective and situational.
|
| https://en.wikipedia.org/wiki/Subjective_theory_of_value
| mbg721 wrote:
| While economics might have some insight into how people value
| things, humans don't really treat everything as a transaction.
|
| The story that comes up from time to time is a day-care that
| charged fees to parents who arrived late, and that caused
| _more_ tardiness, because now the parents didn 't feel guilty;
| now they were buying something.
| zakary wrote:
| I hadn't heard of the day care example before . That's really
| interesting.
| pjc50 wrote:
| One of the core strands of postwar feminism has been examining
| how much uncompensated domestic labour women are expected to
| perform, not just for their partner and their children but also
| for other family members. Especially in the context of care for
| the old or sick.
|
| The term "emotional labour" is the more common used one for
| what you've described as "emotional services".
| simonh wrote:
| I think domestic work does fit into the framework of the
| article as "Transforming Things". Turning dirty clothes,
| carpets, dishes, etc into clean things that can be used
| again; transforming raw ingredients into nice food; shopping
| is moving things. These are productive activities that
| increase wealth.
| zakary wrote:
| Emotional Labour is definitely the better term for it. Thank
| you for giving me the right term to google.
|
| I wonder how much of the 'economy' (in terms of work done and
| the dollar figures we put on that) is actually a part of this
| undocumented category.
|
| The GDP-PPP of countries doesn't take this sort of thing into
| account as far as I'm aware, but I'd like to know what would
| happen to those numbers if everyone simply stopped doing
| unpaid emotional labour. You could get a sense pretty quickly
| of how much society is undervaluing it.
| jkhdigital wrote:
| The reason that the economy is defined in terms of
| transactions that involve an exchange of money is that such
| transactions can be quantified objectively. If no money is
| exchanged, then assigning a valuation to an activity is
| pure speculation. Of course, this doesn't stop bureaucratic
| number-crunchers from attempting to do so anyway (e.g. the
| inclusion of "owner-occupied implied rent" in CPI
| calculations) but it's not hard to see the slippery slope
| it creates. Assigning a name to something ("emotional
| labour") doesn't mean that it somehow becomes quantifiable
| in any tractable or objective manner.
| geogra4 wrote:
| Interestingly enough I believe this is partially why
| there was a "wages for housework" movement[0]
|
| 0:https://en.wikipedia.org/wiki/Wages_for_housework
| bojangleslover wrote:
| What about the fact that she owns half of all marital
| assets as they accrue?
| pjc50 wrote:
| Wasn't always true in all jurisdictions, and certainly
| not in 1972 when the campaign started.
|
| Even today there's a distinction between "is
| theoretically entitled to half the assets by court order
| on divorce" and practical day to day access to that
| money.
| zakary wrote:
| Absolutely agree. Still, it would be cool to see real
| data about this stuff if it could be objectively
| collected
| SilasX wrote:
| Emotional Labor is a horrible term for it, since it has
| little to do with emotions. "Household" or "domestic" labor
| would be better.
|
| Emotional Labor would be a better term for eg the stresses
| of maintaining relationships.
| WJW wrote:
| It comes up commonly in discussions about how poor GDP is
| as a measure of societal wealth. For example, if we would
| strike a bargain to do each others' laundry for a trillion
| USD per year each, the GDP would "magically" go up by two
| trillion compared to if we would just do our own laundry.
| However, no additional value is created compared to the
| current situation.
| rmah wrote:
| GDP is not a measure of economic wealth (much less
| "social wealth", whatever that is) and never has been.
| GDP is a measure of economic _activity_. I.e.
| transactions, spending. But since one year to the next,
| the structure of a nation 's economy doesn't change
| dramatically, it can be used as a _proxy_ for changes in
| wealth.
|
| However, the longer time period you look look at between
| two GDP figures, the less comparable they are. And
| finally, since different nations have different economic
| structures, a direct currency translation may be
| misleading, hence PPP (which is misleading in a different
| way, but <shrug>).
| mkr-hn wrote:
| While this is how the term is misused in some segments of pop
| feminism, it actually refers to the (usually uncompensated)
| emotional labor expected of employees in service industries.
|
| https://en.wikipedia.org/wiki/Emotional_labor
|
| It doesn't really make sense in this context unless you only
| think of the emotional management homemakers do as labor and
| not all the other stuff they do. You already provided a
| perfectly suitable phrase in your post: "uncompensated
| domestic labour"
| rrrrrrrrrrrryan wrote:
| Eh, I've mostly heard it used correctly in feminist
| articles. E.g. "The rise of the gig economy is forcing a
| lot of men to perform emotional labor for the first time."
|
| The most interesting part of emotional labor to me is its
| connection to tipping culture in America. It's the reason
| why you usually tip a waiter but not a bus boy, and why you
| tip the room service person but not the delivery guy. The
| rule of thumb is: if someone's doing a job where they're
| expected to put on a smile even if their dog died that
| morning, they're eligible to get compensated via tips for
| that additional emotional labor.
| rootsudo wrote:
| While I agree these are "wealth creation" mechanisms, what the
| blog describes is market (economy) inefficiencies that enable
| arbitrage.
|
| So by spotting an inefficiency and exploiting it, you profit.
|
| tl;dr explore and exploit.
| dandare wrote:
| You are wrong in a very classical, meaning half of earthlings
| believe this misconception.
|
| Trade can make both sides richer. Some would say any voluntary
| trade makes both sides richer, but that depends on your
| definition of voluntarism and exploitation of someone's
| weakness.
|
| Anyway, for trade that makes both sides really richer in any
| sense of that word see
| https://en.wikipedia.org/wiki/Comparative_advantage#Ricardo'...
| rootsudo wrote:
| I disagree (again) because knowing something sells for a
| lower amount in X but sells for higher in Y is classical
| information arbitrage and opportunity cost.
| eevilspock wrote:
| This is such a patriarchal/capitalist/libertarian/white
| supremacist take.
|
| What about the birthing and raising of children? What about the
| schooling of children? Of course in a man's world this is never
| assigned any value.
|
| What about slavery? America was built on chattel slavery,
| indentured servitude, and lessor degrees of coercion and
| exploitation that leverages asymmetries in wealth and freedom.
| While the first two are technically outlawed, the latter thrives
| as strong as ever. If coercing resources out of the ground (#6)
| is a wealth creation mechanism, isn't coercion of labor out of
| human bodies to do the actual work of #1-6 another wealth
| creation mechanism, even if it's one we don't want to admit, or
| at least talk about honestly?
|
| What about Rentier Capitalism[1]? Is it something we want to
| avoid talking about?
|
| ---
|
| [1] https://en.wikipedia.org/wiki/Rentier_capitalism
| spaetzleesser wrote:
| I sometimes have trouble with the idea of "creating wealth". I am
| not sure if people like Bezos or Gates have created wealth but
| instead have managed to funnel wealth into their pockets. They
| may even have destroyed wealth by suppressing competition and
| potentially better ideas.
|
| It seems the real wealth creators are inventors and scientists
| who create new things . From then it's more if zero sum game
| between different businesses.
| Synaesthesia wrote:
| It's all about how you define "creating wealth". So indeed in
| todays liberal capitalist society we might say that an investor
| who's share trades were ultimately a zero sum game is "creating
| wealth" but a mother raising a child, which is hard work, is
| not.
| munificent wrote:
| I think the main category the author misses is _providing
| experiences_. He lumps "novelist, screenwriter, composer and
| choreographer" as creating information that is "useful in and of
| itself", but I think that's a _real_ stretch.
|
| Experiences can be directly subjectively enriching to the
| consumer even if they don't provide any "useful information". By
| "useful" here, I assume the author means something like "able to
| be used to produce value later".
|
| If I take you on a boat to watch the sunset, I have given you an
| experience that has value, so I have created some intangible
| wealth. But I haven't given you anything you could reasonably
| categorize as "information". It's not like you didn't know
| sunsets were pretty already.
|
| I think this category is important because in many ways it is
| both the most fundamental and also the most unlimited. Ultimately
| most of the other categories of wealth exist to eventually
| provide experiences. Why do I want things? So that I can
| experience having or using them. Very few material objects in our
| life exist for purely utilitarian reasons.
|
| But the real magic of experiences is that they can provide value
| without using anything up. When I take you to see the sunset, the
| sunset is still there for others to see too. When I read a book,
| the book is still able to be read by others.
|
| This is important because as we get closer and closer to using up
| the resources of the Earth, it's good for us to focus on
| intangible experiences that don't actually consume anything.
| jimhi wrote:
| A long time ago I tried to categorize wealth mechanisms like
| this. There are tons of concepts, depending on how high or low
| you are generalizing.
|
| For instance, providing something only the wealthy have to the
| masses (private drivers, smartphones, etc)
|
| I found on the highest level everything could technically be
| boiled down to "paying money for a product or service to remove
| uncertainty". (Buying a hamburger so you don't have to make it
| yourself, insurance, everything)
| johnnyo wrote:
| Did anyone catch this in the comments below?
|
| > There is one major category of wealth-producing activity that I
| just thought of that I did leave out. I'll leave it as an
| exercise to see if anyone can figure it out :-) I'll post it in a
| couple of days if no one gets it.
|
| That was over ten years ago, I don't see a followup.
| davidlee1435 wrote:
| He followed up here:
| https://blog.rongarret.info/2009/10/wealth-production-mechan...
|
| > Producing, storing, converting, and transporting energy is
| what I had in mind as the missing top-level category.
| specialist wrote:
| Nice.
|
| Synthesizing this list with Vaclav Smil's work would be cool.
| https://en.wikipedia.org/wiki/Vaclav_Smil
|
| Maybe use TRIZ as a starting point.
| https://en.wikipedia.org/wiki/TRIZ But recast to focus on
| econometrics.
|
| I'm certain this already exists somewhere. Vaclav is pretty
| dry reading, like reading an almanac, so I didn't get very
| far into his works.
| Stunting wrote:
| Entertainment and distraction? A majority of theater, music,
| and art provide a distraction without providing knowledge or
| information. For the record, I think that is good. We need a
| break from our lives.
| asdff wrote:
| >A majority of theater, music, and art provide a distraction
| without providing knowledge or information
|
| Most art does provide knowledge or information. Look up the
| word "Allegory."
| bovermyer wrote:
| This is a very long-lived, and actively maintained, blog. I'm
| impressed. There aren't many out there like this.
| lisper wrote:
| Not so active nowadays I'm afraid. I'm going through a bit of
| an existential crisis (thinking about climate change).
| matmatmatmat wrote:
| Would be great to get your thoughts on climate change when
| you get the chance.
| lisper wrote:
| I'm debating with myself over whether to write it up. The
| TL;DR is that I have come to believe that the situation is
| much more dire than anyone seems to realize. The big short-
| term problem is going to be changes in rain patterns, which
| will cause crop failures, which will result in world-wide
| famines, which will lead to political unrest, which will
| lead to WW3, and that all this could happen in my lifetime.
| The really scary part is how fast things are changing. I
| live in northern California, and the changes we've seen
| here just in the last ten years are dramatic. People think
| about climate change as playing out over centuries or maybe
| decades, but it's not. Things are changing year-over-year.
| The scariest thing is that even if we cut emissions to zero
| tomorrow (and obviously that is not going to happen) that
| would not solve the problem. We have to actually go to net
| negative emissions to avoid catastrophe. So an actual
| solution seems out of reach in any realistic scenario.
| We've taken carbon that nature has sequestered over a
| period of hundreds of millions of years and released it in
| a period of a few hundred. That genie will not go quietly
| back in her bottle.
|
| There is literally nothing that would make me happier than
| to have someone convince me that I'm wrong about this.
| bovermyer wrote:
| OK, but... so what if the world ends? The universe won't
| care.
| alan-crowe wrote:
| On the issue of rain fall in California, I'm reminded of
| "However, imagine that California had to get its entire
| water supply of 35 million acre-feet per year by
| desalinating sea water at the Santa Barbara price. This
| would come to $70 billion per year, which is on the order
| of ten percent of the state's GDP. We'd survive, but it
| would be a blow to our standard of living, and the
| arguments about whose fault it was and how the cost
| should be allocated would be exciting."
|
| from http://www-
| formal.stanford.edu/jmc/progress/water.html
|
| which agrees with you about political unrest, but not
| about famine. Before I read that, I assumed that
| desalination was only for drinking water, and far to
| expensive for agricultural use. That is probably about
| right for poor countries, but rich countries might get
| through the total failure of the rains without famine
| (and without WW3).
| state_less wrote:
| You're not alone lisper. I thought of another way to grow
| your wealth to add to your list, risk reduction. If you
| can reduce the risk of losing wealth, you stand to gain
| more wealth.
|
| For example, it's great to have crop lands, healthy
| national parks and coastal cities, but if you don't
| address risks to this wealth, you stand to lose it. When
| you lose wealth, you also forfeit gains you might have
| otherwise had from them. So taking care of your downside
| also adds to your upside.
| alan-crowe wrote:
| I think it is missing something foundational. People have
| preferences over both production and consumption. Perhaps Mr A
| likes to consume X, but hates the work involved in producing X.
| Meanwhile Mr B likes to consume Y but hates the work involved in
| producing Y. Rather that A doing without X and B doing without Y,
| they could team up, swapping chores. Mr A makes Y for Mr B and Mr
| B makes X for Mr A. That clearly makes them better off, and needs
| to be on the list of wealth-creation mechanisms.
|
| But it sits awkwardly with the materialistic focus of the
| catalog. There are two people, producing the same things and
| consuming the same things, but with two scenarios with different
| levels of wealth. Ron's catalogue aggregates preferences; no
| difference in what work gets done? No difference in wealth.
|
| That raises an awkward question about language. Do we say that
| wealth comes from diversity of preferences? Or do we say that
| wealth comes from specialization and trade? Sometimes the two
| mechanisms operate conjunctively. A diversity of preferences does
| not, in itself, generate wealth. The wealth only comes if, in
| addition, one does the trading to exploit the diversity of
| preferences. But that specific kind of trading only generates
| wealth if there is a suitable diversity of preferences to
| exploit.
|
| That makes me doubt the value of a catalogue written as linear
| list. One needs to catalogue the package deals (for example:
| preference diversity AND trade).
| jkhdigital wrote:
| From what I recall, this distinction was the subject of
| vigorous debate among early economists formulating theories of
| value, especially among the Austrians. The "textbook"
| undergraduate explanation is that diversity of productive
| endowments leads to gains from specialization and trade, but
| the subjective theory of value perhaps enriches this notion:
| the "cost" of using up a scarce productive resource may be
| subjectively determined, which means that two humans who appear
| to have the same productive endowment nonetheless may have
| different preferences of what to produce.
|
| Also, your comment about package deals strongly reminds me of
| stuff I recently read in Thomas Sowell's *Knowledge and
| Decisions.
| lumost wrote:
| I think the challenge here is that when people think about
| wealth creation they directly associate it with a net
| productive activity.
|
| In theory A & B can satisfy their own needs in the above
| scheme. Or we could have a village where everyone satisfies
| exactly one other persons material needs. These activities do
| not result in net wealth creation.
|
| On the other hand if A makes X and X is consumed by B through Z
| then A has freed up B through Z to do something other than
| making X. Even then there is an argument to be made that some
| forms of production are self-limiting in that society as a
| whole cannot continue to be more productive if everyone is
| involved in specific kinds of high labor, low scalability
| activities which do not lend themselves to improvements over
| time.
| awillen wrote:
| This seems like it's covered under 3 and 9a. Mr. A has a demand
| for X and Mr. B has a demand for Y. Wealth can be created by a
| combination of 3 (making whatever it is they have a demand for)
| and 9a (creating a marketplace that matches their demands with
| whoever can supply them).
| alan-crowe wrote:
| Number 3 exhibits the over simplification that I claim misses
| something important. Number 3 leads you down the path of
| thinking that society can only get more wealth by more
| transformation. Nothing in 3 allows for creating wealth by
| swapping jobs round to make workers happier.
|
| 9a does not, in itself, go beyond the Marginal Revolution. In
| the basic version of marginalism, the demand curve slopes
| down because every-one, uniformly, has less appetite for
| extra when they are already well supplied. And the supply
| curve slopes up as production is pushed to include less
| fertile land or to refine from less concentrated ore.
|
| Diverse preferences over production and consumption are an
| extra twist to the story.
| pjdemers wrote:
| I would add to 9, "Move and store information". That's what most
| of us here in HN do.
| eevilspock wrote:
| But what is actually being _paid for?_ Who is ultimately paying
| "our" salaries? Why?
|
| _"The best minds of my generation are thinking about how to
| make people click ads. That sucks."_
|
| ~ Jeff Hammerbacher, fmr. Manager of Facebook Data Team,
| founder of Cloudera. http://daltoncaldwell.com/an-audacious-
| proposal
|
| _" It is difficult to get a man to understand something, when
| his salary depends upon his not understanding it!"_
|
| ~ Upton Sinclair
| darkerside wrote:
| I don't see anywhere that Automation fits into that list. We can
| create value by automating many of the other items on the list.
| Relevant today is the automation of serving information (web
| developers!), but automating transformation (factories) was a
| game changer for industry.
|
| Also, > Google makes money via 9a, not 9c. I don't think that's
| true. Google makes most of its money on ads, not market making.
| While there is an aspect to ad serving that is market making, I
| think it's fair to characterize their primary revenue stream as
| money-for-eyeballs, which is very much monetization of
| Information.
| barneysversion wrote:
| I think Google does make money via 9a based on who pays for it.
| Consumers don't pay for the information. Advertisers do pay for
| matching their ads to likely buyers.
| [deleted]
| zakary wrote:
| I think automation could probably be considered a subset of
| each item. Automation is a process not really a product. At
| least in this context the fundamental unit of wealth is the
| value to people. Automation per se doesn't really have value to
| people, it's the fruits of that automation that has value. If
| use a robot which uses automation to make a car, then the car
| is the thing that has the 'created' value.
|
| If I write an automation program for some computer task like
| sending people information that they want, then it's really the
| info that drives the wealth creation in this context. The
| Automation is just a means to an end, not the goal by itself.
|
| Having said all that, I think Automation is absolutely the main
| driving factor in the massive acceleration in the amount of
| wealth being created. What will be really interesting is if we
| ever get to a point where whole industry verticals are entirely
| automated. If there is no human input or labour involved in
| mining, manufacturing and distribution of a product, especially
| if that product is only used by other autonomous system; what
| value can we as humans place on that item? Does it add value in
| any tangible way?
| yetihehe wrote:
| > If there is no human input or labour involved in mining,
| manufacturing and distribution of a product, especially if
| that product is only used by other autonomous system
|
| Creation, energy and maintenance of machines are not free.
| People who provide this things to site need money too, so it
| adds to price of mined items. Then moving and
| transforming/smelting those things costs too. Watch springs
| are several orders of magnitude more valuable per kg than raw
| mined iron.
| [deleted]
| jkhdigital wrote:
| > 8. Find entirely new ways of doing any of the above more
| efficiently or effectively. This is "research" or "invention."
|
| I think automation fits squarely into #8.
| ninly wrote:
| I agree, but would add the importance of #3. You can't
| transform/manufacture things without some process for doing
| so (or doing so more efficiently or effectively than was
| previously possible), and the physical means to this itself
| needs to be created/manufactured. It's 'tooling' and there's
| a kind of chicken-egg thing going on. Also related to the
| distinction between algorithms in the abstract sense and the
| infrastructure (software or otherwise) that enables their
| implementation.
| darkerside wrote:
| Yup, good point.
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