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Imagine I find a way to create bread from thin air and don't tell anyone else how to do it. Assume the value of a loaf of bread to a consumer is 1 dollar. I sel
by cousin_it 10y ago
Imagine I find a way to create bread from thin air and don't tell anyone else how to do it. Assume the value of a loaf of bread to a consumer is 1 dollar. I sell 100 loaves for 99 cents each, because that's what the market will bear. How much money have I made? 99 dollars. How much value have I created for everyone else? 1 dollar.
Now imagine instead I give away 100 loaves for free. How much value have I created for everyone else? 100 dollars. How much money have I made? Zero.
Do you now see the problem with estimating a person's usefulness to society by looking at their net worth?
- obstinate 10y agoThat's not really how consumer surplus works. Just because "the market will bear" a certain price, does not mean the value to a given buyer is that price. In reality, there are probably some who really do only value the loaf at $1, but others would be willing to pay $1.10, $1.20, or even more before the transaction was no longer break-even. You might make an attempt to capture this surplus as well (this is called price discrimination), but it's notoriously difficult to do with commodities. Also, there is no actor in the world economy who is having an effect like your metaphorical bread-give-away-er. So while it might hypothetically have been better if someone had built Amazon out of the goodness of their heart and operated at cost to all users, that is not one of the alternatives we have to decide between. There doesn't seem to be any evidence that such altruists are out there waiting in the wings. If anything, they'd have a competitive advantage, if they did exist, because they'd be able to offer lower prices.
- cousin_it 10y agoAmazon uses lots of open source software created in large part by altruists for free.