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>> The growth of “zero-sum” activities may, however, be even more important. Look around the economy, and it’s striking how much high-talent manpower is d
by paul_milovanov 9y ago
>> The growth of “zero-sum” activities may, however, be even more
important. Look around the economy, and it’s striking how much high-talent
manpower is devoted to activities that cannot possibly increase human
welfare, but entail competition for the available economic pie. Such
activities have become ubiquitous: legal services, policing, and prisons;
cybercrime and the army of experts defending organizations against it;
financial regulators trying to stop mis-selling and the growing ranks of
compliance officers employed in response; the huge resources devoted to US
election campaigns; real-estate services that facilitate the exchange of
already-existing assets; and much financial trading.
>> Much design, branding, and advertising activity is also essentially zero-sum.
That's a remarkably short-sighted view of economic activity.
A functioning legal system is critical for the operation of an economy. Without one, markets don't work and neither do various sophisticated financial services we enjoy (insurance, loans, mortgages, etc).
Financial fraud, regulation & policing are the cost of having a dynamic and sophisticated financial system. It's had a tremendously positive impact on our societies and individual lives, which we're almost completely oblivious of.
Ditto every other item in his list.
If you think that some popular, ubiquitous sort of human activity creates no genuine value to individuals or the society, you probably haven't thought about it long enough.
- krona 9y agoBang on. New instruments of finance/investment (public companies, bonds and shares) and the legal institutions that arose at that time to protect investors were one of the most important catalysts of the industrial revolution, possibly the most important driver of productivity growth in the history of mankind. You could argue that eventually the finance industry becomes so large that it reaches equilibrium within the markets it operates (Mervyn king has suggested the same about the City of London), thus becoming zero-sum, but this nuance is completely absent.
- matt4077 9y agoThe article doesn't require _all_ financial services, legal services, advertisement etc. to be zero-sum. It only needs some aspect, of some of these activities, to be zero-sum.
- paul_milovanov 9y agoIt sure claims that they're all mostly useless though.
- dleslie 9y agoYes, clearly Adair Turner hasn't thought about this much. /s Or perhaps you should consider that in a zero-sum game individual agents can produce great value, while the system as a whole does not. This is a macroeconomics article, after all.
- thaumasiotes 9y ago> Yes, clearly Adair Turner hasn't thought about this much. The staggering assertion that "facilitat[ing] the exchange of already-existing assets" is an activity "that cannot possibly increase human welfare" suggests that you're right about this, however much you may have thought you were being sarcastic.
- dleslie 9y agoSolely moving assets within the system does not create growth of the entire system. No new assets have been created in the exchange. One group digs the holes and the other fills them, and it can appear that productivity for both is good while the system doesn't particularly make any headway.
- paul_milovanov 9y agoSuppose I have peanuts and you have shellfish. I don't care for peanuts (in fact, I'm allergic to them). The subjective value that I assign to them is zero (or negative) Same thing, you don't care for shellfish (religious reasons). Suppose we move around existing assets -- trade peanuts for shellfish. All of a sudden both of us have something we can use, of non-zero subjective value (the only kind of value that exists, btw). To say that no value has been created in the transaction is quite simply to ignore the basic universal motivation for trade. Every voluntary transaction happens only because both parties believe that they're getting the better part of the deal (I'd rather have shellfish than peanuts).
- dleslie 9y agoThat's not the sort of activity the article was taking aim at; the author's example of regulators and compliance officers was appropriate, I think. The agents may have come to act in a manner where much of the labour that each engages in is justified by the actions of the other, and so the bulk of their combined labour cancels itself out and we have little increased utility on the whole. Whereas your trade of shellfish and peanuts don't behave in this manner.