Right... and GDP being a bad metric (for most decisions) doesn't have any relevance to the discussion. It doesn't imply anything about the thing it measures.
By analogy, good engines produce power. A speedometer measures the engine's power under a set of conditions. However, a speedometer is not (by itself) a good way to measure an engine because there are other factors you care about. The fact that a speedometer is a bad measure of engine power does not mean that engine power is unimportant or bad.
If I said, "high max speed means good engine," or "high GDP means economy is working well," your comment would be relevant.
I did not say that. I said "the overwhelming majority of transactions in an economy are of mutual benefit to the transactors."
Being of mutual benefit to the transactors is not the same as being of value for your neighbor. A transaction being mutually beneficial to the transactors is neither necessary nor sufficient for the transaction to be generating value.
Consider FooCorp paying an advertiser to convince people to buy its gizmos rather than the market leader Bar Inc.'s widgets. This is then followed by Bar Inc. paying the same advertiser to convince the same people to go back to buying widgets again. Each transaction is to the benefit of both the advertiser and the respective manufacturer, but taken together leaves the world in the same state as it was to begin with. No value was created. In fact, value was destroyed (the opportunity cost of labor by the advertiser).
An example of a transaction that is not to the mutual benefit of the transactors, yet increases value is the levying of fines against behavior which has externalized costs greater than their internalized gains. The fine is not to the benefit of the party it is levied against, but the effect of deterring negative-total-value behavior is equivalent to creating value.
I'm not convinced >99% of people's jobs are of the value-creating kind but it's certainly well above 50%. Several of the largest companies in our industry are arguably of the negative value kind. Insurance companies that accept premiums but deny legitimate claims certainly are.
llamaimperative|1 year ago
By analogy, good engines produce power. A speedometer measures the engine's power under a set of conditions. However, a speedometer is not (by itself) a good way to measure an engine because there are other factors you care about. The fact that a speedometer is a bad measure of engine power does not mean that engine power is unimportant or bad.
If I said, "high max speed means good engine," or "high GDP means economy is working well," your comment would be relevant.
I did not say that. I said "the overwhelming majority of transactions in an economy are of mutual benefit to the transactors."
snackbroken|1 year ago
Consider FooCorp paying an advertiser to convince people to buy its gizmos rather than the market leader Bar Inc.'s widgets. This is then followed by Bar Inc. paying the same advertiser to convince the same people to go back to buying widgets again. Each transaction is to the benefit of both the advertiser and the respective manufacturer, but taken together leaves the world in the same state as it was to begin with. No value was created. In fact, value was destroyed (the opportunity cost of labor by the advertiser).
An example of a transaction that is not to the mutual benefit of the transactors, yet increases value is the levying of fines against behavior which has externalized costs greater than their internalized gains. The fine is not to the benefit of the party it is levied against, but the effect of deterring negative-total-value behavior is equivalent to creating value.
I'm not convinced >99% of people's jobs are of the value-creating kind but it's certainly well above 50%. Several of the largest companies in our industry are arguably of the negative value kind. Insurance companies that accept premiums but deny legitimate claims certainly are.
tsupiroti|1 year ago