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Wealth: The Toxic Byproduct (2013)

• gtCameron 8y ago
  This went off the rails for me at the end. If earning money is good for other, but spending money is bad, then the "best" thing I could do would be to earn money and hoard it under my mattress. However, that would be the worst thing I could do for society, because I would be removing that resource (whether it has intrinsic value or not, it is still a resource) from society. In order for me to earn money, someone else has to spend it. I don't see what labeling one of the sides of that transaction as good and and one as bad accomplishes.
  • dnautics 8y ago
    Why would you be removing it from society? Presumably you will be using it in the future.
    • sowbug 8y ago
      The area under the curve is empty until then.
      • mbrumlow 8y ago
        What do you imagen happens to unspent money put in a bank?
        • dnautics 8y ago
          it is used as collateral for the money multiplier.
        • sowbug 8y ago
          Money in a bank is typically lent back out again, where it continues to circulate in the economy. That's irrelevant to this comment thread, though, which gtCameron kicked off by stating that hoarding money under a mattress is bad for society, to which dnautics responded by noting that even mattress money is eventually spent.
  • aylmao 8y ago
    It goes on to explain it in the following paragraphs: > Don't get me wrong — this is far from the full picture. There are a ton of second-order corrections we need to make. We'd want to inquire how the money was earned, for example. If it's earned in free, honest, competitive transactions, it's going to be a better measure of value-added than if it's earned coercively, dishonestly, or in stifled markets. If it's earned in positive-sum games (like farming), it's going to be a better measure of value than if it's earned in zero- or negative-sum games (like spamming). > On the spending side, we need to account for whether the goods we're consuming are rivalrous or non-rivalrous, as well as all the externalities from consumption, both positive and negative. If no one consumed anything above basic subsistence, we'd have a lot less economic growth, fewer innovations, and inferior technology (including medical technology).
    • airstrike 8y ago
      > Don't get me wrong — this is far from the full picture. There are a ton of second-order corrections we need to make. I'm sorry, but the author makes a terribly weak argument and than hand-waves any criticism away preemptively. That's not how this should work. That "ton of second-order corrections" would immediately destroy his argument.
  • mbrumlow 8y ago
    If you were actually hoarding in your mattress yes -- but most of us will never probably have enough money alone, or even as a group to horde under a mattress that the economy or society would actually notice. Now if you were hoarding the money by putting it in banks and various other investment vehicles -- then you are doing a great deal of good for society -- as the resource is not actually being removed. I hear this argument lot, but just because you are not using your money does not mean somebody else is not using your money while you are not using it. The only case that might be true is if you were a real life Scrooge McDuck, but then you probably killed yourself the first time you tried to dive into your vault of coins.
    • notahacker 8y ago
      The whole article is a defence of the principle of actual hoarding as opposed to investment though, hence the author's expression of concern that spending the money might generate inflation, their focus on intertemporal arbitrage with assets rather than lending, and their contention that taking an asset out of circulation and profiting from its future price fall represents a tangible "time-shifting" service performed on the asset. Those who have read more mainstream economics and less Austrian economics would argue that any value generated (as opposed to rent extracted) comes not from what is withdrawn from circulation but from the advance of cash to the grain vendors who might be able to make better use of it than they could the unsold grain: the time value of money comes from allowing money to circulate towards those willing to invest in productive activity, not from withdrawing it from circulation. A corollary of the emphasis on circulation of money rather than withdrawal of goods is that whilst buying a yacht might be far from the best thing you could do for the Congoese people, creating a whole load of boatbuilding jobs (which in turn sees more goods spending and more production to meet increased spending) is likely still better for Congoese economic development than keeping the money you'd received from trading in their economy under your bed.
      • mbrumlow 8y ago
        But how are you removing a asset from circulation? Like I asserted in my original post when you are not using money, somebody else is -- unless you are actually putting your cash in a vault. When ever you store money in a bank, it gives the bank the ability to make loans using that very money to other people who then can start other businesses which intern then generate more exchanges of cash with other people. So again, unless you are actually storing raw cash under your bed -- the fact that you are not spending it is not a ill effect on the economy as a while. I also postulate nobody has a bed big enough to store enough raw cash that the economy would ever notice. In short I am calling BS on the idea that you can actually remove money from circulation -- other than actually destroying it that is. Maybe I am still missing the point, but just because you have a bunch of money does not mean you need to make boat building jobs. The bank can easily loan the money out to any of the Congolese people who can show that boat building is a good business. And you who have made a bunch of money off speculation can be part of that by simply hording your money into a bank.
  • markbnj 8y ago
    > However, that would be the worst thing I could do for society, because I would be removing that resource (whether it has intrinsic value or not, it is still a resource) from society. I think the author would say that the pile of money under your mattress is not a resource, but rather just a pile of tokens that represent an ability to acquire resources in the future. If the author's view is correct then keeping it tucked away under your mattress has no net positive or negative effect: it just sits there. The exchanging of valuable resources that produced the tokens happened sometime in the past.
• jellicle 8y ago
  People will go to great lengths to say "greed is good", but it still isn't.
  • test6554 8y ago
    People also go to great lengths to demonize the wealthy and also try to get some of their money. I can totally understand why rich people would want to build elysium.
• 11thEarlOfMar 8y ago
  Ok, I read through sections I and II, and no further. Sticking my neck w-a-a-a-y out there, I would loan the francs on my table to Congolese who could convince me they can make a business, provide a product or service, grow the business and employ other Congolese. Essentially, become a bank that makes only business loans. Perhaps charge interest, perhaps not. I'd recycle loan payments to make new loans to new entrepreneurs. I'd meet periodically with the borrowers to learn what is working for them and what is not so that I can select better candidates over time, hopefully before I run out of francs...
  • iso1337 8y ago
    You can try out kiva.org My problem with it was that most of the businesses were of the retail type (selling clothes on the streets). I’m not an economist but that seems to me to not have much potential for lifting many out of poverty.
    • hinkley 8y ago
      The context would matter. It’s a very common refrain to describe how many hours are wasted each day acquiring some necessity like food, water or shelter (I roughly include clothes under shelter). Opening a clothing shop in the central market of the largest town wouldn’t move the needle. Opening it in your village or the nearest crossroads could alter many lives.
      • iso1337 8y ago
        That’s a good point. Unfortunately kiva doesn’t give you many tools to make those assessments. You get a picture of the person applying for the loan, and then about a paragraph describing what they will use it for. Very light on numbers and no follow up on how their business is doing post-loan. After a while it felt like the site was selling me the feeling of being a good person, above all else.
  • bitxbitxbitcoin 8y ago
    That's the "banking" path proposed and not further explored in section II.
• tristor 8y ago
  This article is an interesting thought experiment, but I can't help but feel that the statements made are in such opposition to understood economic principle and call into question basic moral precepts. That doesn't mean it's wrong, it just feels alien to read. As an example of what I mean, the idea of consumption being a net-negative destructive action goes against the economic concept of velocity of money and how that drives economic engines. On the other hand, I can understand because the net value is perhaps negative of a grossly consumptive action like buying a yacht, simply because of the natural resources consumed to produce it. Economics rarely accounts for the externalities.
  • illumin8 8y ago
    I agree. I was in agreement with the article when it says that money we earn is a statement of the value we provide to society, so earning money is good, however, I don't agree with the statement that spending money and consumption is bad. The example of the yacht is rather contrived as well. They talk about how all of the craftsmen and lumber workers had to chop down, dry, age, cut and polish the wood to make the yacht, however, it's somehow evil for us to buy it? This seems rather ridiculous when you consider that the money used to buy that yacht paid the salaries and income of all the craftsmen and laborers that built it for you, compensating them for the value they provide to society. If there was nobody willing to consume or buy products, how would anyone make income? This article seems to understand capitalism superficially, then demonstrates the authors know little about capitalism in the final paragraphs.
    • tristor 8y ago
      > If there was nobody willing to consume or buy products, how would anyone make income? I don't know what the author's intention was, but my assumption when I read that was their economic world view is one in which people should focus inwardly, striving for sustainability over specialization. It's conceivable to have economic exchange without luxury goods, because that labor can instead be directed into other activities. That said, I had many of the same questions myself. I think specialization in society has been historically important to the betterment of humanity in many ways. As has the ability of markets to enable businesses to invest labor ahead of sales, so whether or not someone purchases something (with the exception of custom projects like a yacht) rarely has any impact on whether or not it will actually be made. Just ask Atari.
• nostrademons 8y ago
  It's interesting to speculate on what would happen if some of these foundational assumptions of economics didn't hold. What if money actually became more valued than what you can buy with money? What if supply didn't create its own demand? What if people didn't try to make money to satisfy their own wants, but to one-up their neighbors in the pissing match of life? You'd see a lot of strange behavior. Instead of consumption or even investment, excess money would be put towards speculation, trying to raise the dollar value of your holdings regardless of what you can buy (which you don't want anyway). Instead of circulating through the economy, money would pool at the people who already have their earthly wants satisfied and have no need to spend it. Instead of focusing their money on optimizing production, businesses would spend money on services or people that would help them convince others to buy their product. And instead of buying businesses for additional revenue, they would be more motivated to buy businesses that threaten to destroy the revenues they already have. You might even get really crazy behavior, like people creating their own currencies that they then put lots of real money into, so that they can feel rich in their own little domain. In short, it wouldn't look all that different from the world of today.
  • gtdawg 8y ago
    To me, you were describing today's world. Maybe that was the point.
  • marnett 8y ago
    brilliant perspective. thank you for sharing.
  • ChuckMcM 8y ago
    I'm not sure I would use the word "interesting" it is more likely "illuminating" :-) But word selection aside, one of the problems that money brings is that it is a concrete number, and thus susceptible to being coerced into being a "score." This is particularly true when you have people who are insecure about their value, they might get it into their heads that the person with the highest "score" has the highest value. As the author points out that isn't a horrible place to be, it helps the economy, but it does become toxic when a person uses consumption to advertise their score relative to other people. (It becomes tragic when someone borrows to spend consumptively in order to present the illusion of having a higher score). One of the examples of how broken this can be, is that of creating a company (with some paperwork and about $1,500 you can do this easily in California), then issuing yourself 5 billion shares in the company (also easy to do, just register them with the SEC), and then "sell" 20 of your shares to a friend of yours (who is a qualified investor :-)) for $20 to establish a "market value" for your shares. And Poof! you are now "worth" $4,999,999,980 by virtue of the "value" of the shares you still hold, you are a billionaire! And you only need to pay the $850/year to maintain your corporation's status. So who wants to be a billionaire right? And what does that mean? You have a high "score" but you don't have any real wealth. You can't really sell a billion shares for a billion dollars. That isn't going to happen right? So now people play this game in the crypto coin market, creating a coin nobody will actually use, giving them selves a bunch of it, and selling some to speculators to establish a story about what that coin is "worth." What does it mean really? Not a thing.
• omegaworks 8y ago
  >you'll be helping a few people, but at the same time causing inflation that will hurt everyone else This is immediately troubling and betrays a naive understanding of currency and human behavior. This article essentially writes off and lumps together all kinds of toxic behavior we see in private markets.
• castlecrasher2 8y ago
  I generally categorize philosophy and ethics works into separate categories: profound, interesting but not particularly useful, and inane. This one falls squarely into the third category, especially when the author tries to play off spending money on yourself as wrong. To be fair, he seems to be entirely Utilitarian so I guess I can't blame him for suggesting self-flagellation.
  • AnimalMuppet 8y ago
    I don't see the Utilitarian value of self-flagellation...
  • squish78 8y ago
    In his world, it seems like the only equitable solution is for everyone to become subsistence farmers and hunter-gatherers
• asdfasgasdgasdg 8y ago
  You can trivialize almost any profession by stating it reductively. "All we do is put boxes on a page, or change the color of the boxes." OK, well all a farmer does is dig some dirt, and sometimes put some plant bits into it or pull some out. All most doctors do is talk to patients and sometimes give them some pills. All a soldier does is point guns and pull triggers. All a factory worker does is pretend to be a robot eight hours a day. Etc. I don't admire the guy for failing to adequately state the value he's bringing to the table. More to the point: most of society is by his estimation engaging in trivial bullshit. Faux intellectual software developers like to self-flagellate. Sure. We work on stupid stuff. But what do they think toy makers, the entire entertainment and financial industries, fashion, much of the auto industry, and even the majority of the housing industry are busy doing? They're all selling products that people don't need and probably won't make them much happier or better off. Don't like it? Go be a hermit. The story of the twentieth century was the pursuit of largely pointless (from a well-being perspective) excellence. That will probably remain the case for the rest of human history, since we already have almost everything we need for well-being built in, and the small remaining set is really cheap and no longer economically significant. (I guess this is ultimately the point of the article . . . sort of . . . but I'm so over the trope in the first section that I just had to react to it.)
  • j-c-hewitt 8y ago
    Crazy doctors! Don't they know all their patients will die anyway, eventually?
  • deleted 8y ago
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  • Novashi 8y ago
    Some people earn money by doing literally nothing but essentially clicking “Buy these stocks” and leaving it alone for years. It seems more like a personal cry that they don’t find the work fulfilling, but it’s far and away from earning something for nothing.
  • squish78 8y ago
    He lost me when he compared it to being a plumber. If we didn't have plumbers, our infrastructure would collapse very quickly. Without sanitary waste disposal, disease would run rampant
• bitxbitxbitcoin 8y ago
  "Earning money (via production) is good for others. Spending it (via consumption) is bad." In the buying-an-iPhone-is-consumption-and-bad spending example, if the iPhone is also used to increase the reach or efficiency of production, does that cancel it out? I like the yacht example better.
• cryoshon 8y ago
  >We earn money by providing value to other people. And consequently, >The money you've earned represents value you've contributed to society. >This holds across almost every asset class and profit-making strategy in the modern world. if i extract 100 tons of carbon from the earth in the form of petroleum, then sell it to make a profit of $100, that profit does not take any externality into account. i could be making it such that $101 dollars of future economic activity is prevented by virtue of the extraction process or subsequent combustion and ruination of the environment. the petroleum "provided value" -- positive short-term value, but with a stiff cost of net negative value in the future. the fact that i subsequently use those $100 that i made to consume some product isn't relevant. society would have been better off if i hadn't made the money in the first place. this stuff isn't hard.
• orcdork 8y ago
  Ahem - never thought I'd see a link on hackernews glorifying hoarding (the economics type), but here here are. "Imagine a particular bag of grain that you bought at T1 for 200 francs, and then sold a month later, at T2, for 800 francs." What about at 1600 francs? What about at 16000? The original argument was about morals, not math or some kind of utopian economy where every transaction is fair.
• Crye 8y ago
  Doesn't this argument break down fairly quickly when you take into consideration information asymmetry between actors. Let's imagine you are providing future options to Congolese farmers, but you know you can poison the water supply and cause specific crops to fail. In this situation you, you sell the Congolese farmer a contract stating that he will sell his crop for a specific price while you know the constrained supply will increase the price to absurd levels. Know you just got a bunch of money and yes you provided "value" to the farmer but at the cost of everyone else.
• theptip 8y ago
  > Wherever the money came from, if you dump it through the window, you'll be helping a few people, but at the same time causing inflation that will hurt everyone else. On first read I thought that this was incorrect, but on pondering a bit more, I think it's sound -- the observation is that in effect you're creating new Congolese money, and you've not actually produced any value to add into the economy, you've just increased the numerator in the <currency/value> equation. (Taking the example further, if there's 100 CDF in circulation, and you add 100 CDF to the economy, then you'd have to reindex and make everything cost 2x. The only reason this isn't obvious is because it takes time/transactions for this price signal to equilibrate through the economy, and so it's impossible to measure on the scale that the example considers. Perhaps this is more obvious if we reconsider the thought experiment with X=(Congolese GDP).) On the other hand, if you were to hand over some USD from your pocket, those have "inherent value" from a Congolese person's perspective, in that they are fungible with goods on the international market and don't remove value from someone else's currency. Anyone with actual Economics theory know if my intuition here is correct or what model describes it?
  • notahacker 8y ago
    You might not have produced anything, but you have given somebody else that produced something a reward, so now they can start making new things and buy new material right away. Also, they know there's a wealthy foreigner that keeps handing out Congoese Francs, so there's more incentive to do so. Where the additional money is spent it'll tend to drive up prices; where it's invested in additional production it won't. In practice, on a national level it's unlikely any individual is going to drive up the general price level because the actual quantity of currency in circulation is driven by the banking system (which ha policies specifically designed to keep the supply and demand for money in balance). And an tourist handing out currency willy nilly is going to have a big impact on prices in a small village regardless of what currency they pay in, because there's not much choice or competition there. In terms of theory, the basic intuition is described by the Quantity Theory of Money and the reasons why prices/wages tend to rise slower than wages is covered by (New) Keynesian economics; covering when, how and why the extra spend might lead to more growth or more inflation is pretty much the entire first year of undergrad macroeconomics (particularly with the USD added in as well; that introduces the dynamic of how a fall in the value of the Congoese Franc affects imports and exports and resulting effects on local production)
• hendzen 8y ago
  For one, you could simply hand the pile of cash out to the first person who comes by your window. Or you might hand small amounts of cash to a bunch of different people. Both of these seem like nice things to do. But then you wonder: what if the cash in your living room is counterfeit? More to the point — does it even matter? Wherever the money came from, if you dump it through the window, you'll be helping a few people, but at the same time causing inflation that will hurt everyone else. The key issue with this entire blog post is that it ignores the distribution of wealth within the hypothetical Congolese market. What if one person in the marketplace has 99% of the money, and everybody else has the rest evenly divided between them. Then under some moral/ethical frameworks it might be beneficial to distribute the money evenly to the rest of the population at the cost of inflating away some of the single rich person's wealth. What you do with the money affects the distribution of wealth & goods within the society. What is a good distribution? You need a moral/ethical framework to decide. I won't make an assumption on which one we go with, but lets say we go with one. Not spending or donating the money is making the choice that the distribution of wealth as it currently exists is the most optimal. Is this just? Depends on your moral/ethical framework. Saying that earning is good and spending is bad is overly simplistic. You need an objective function on the distribution of wealth. Earning money in a way that warps the distribution away from the ideal can then be considered bad (and thus should be 'corrected' via taxation and other methods) and spending money in a way that warps the distribution toward the ideal can be considered good and should be rewarded (via tax credits etcetera).
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• ganonm 8y ago
  "The point is, money spent on consumption is toxic — value-destroying" This is something I've been thinking about a lot recently. Surely when comparing inequality in societies, what we really care about is consumption. Singling out billionaires as an example of how unequal our society, I feel, is disingenuous. How much more does Bill Gates really consume than your 'average Joe'? Sure, he presumably eats good food, wears better clothing and has a big house, but his personal consumption levels are probably no more than an order of magnitude greater than ours. What separates him then from us, considering he has a paper net worth many orders of magnitude greater than us? Well, mainly that wealth grants him an outsize influence on the economy. By virtue of his wealth and participation in the stock market he has access to some very big 'levers'. He can dictate what a large portion of the workforce choose to pursue as 'productive economic output'. He is, by means of increasing his net worth, incentivised to make prudent decisions in this regard. High performing participants in the stock market gain more influence in it. This is an optimising feedback loop for the economy and is less fair (but more effective) than simply giving everyone an equal say in the matter. Is this a problem? Maybe. But does it really make our society more unequal? I would argue 'not as much as you might think'.
  • notahacker 8y ago
    > High performing participants in the stock market gain more influence in it. This is an optimising feedback loop for the economy and is less fair (but more effective) than simply giving everyone an equal say in the matter. This assumes decisions which drive up the share price of Microsoft and/or the personal satisfaction of Bill Gates tends to yield better economic performance than decisions which represent what the public want. There's good reason to believe there are many situations where this isn't the case (the Gates Foundation's projects to help humanity are a thing, but so are battles for monopoly power). Wealth also tends to be much more heritable than entrepreneurial vision...
    • ganonm 8y ago
      Your point about inheritance is a very good one and is a rather major flaw in the capitalist model. Inheritance tax goes some way to dampening the transfer of power from one generation to the next but isn't perfect. Hard to see how this would conceptually be solved without required a 'robin hood' style system that 'resets' everyone's economic status regardless of who their parents are.
• spoonie 8y ago
  If you find your job really easy, what’s the best way to arbitrage it and get more value out of your brainwork? Do the same work in less time and gain more vacation/leisure time?
• joker3 8y ago
  You can't earn money if no one is spending it. That seems like an important fact that the author is missing.
  • tlb 8y ago
    What situation do you have in mind? As long as people have money, they’re going to spend some of it on food and clothing and entertainment.
• jdietrich 8y ago
  Most transactions are broadly a win-win - I have something you want, you have something I want, so we're both better off if we trade. That's the core justification for a free-market economy, and it's a very important one. Most, but by no means all. Some are outright fraudulent, because I'm lying about what I'm selling. Some are coerced, because I've used my economic, social or political power to rig the deal in my favour. Some have unpriced externalities - you need oil, I have a shale oil field, we're both better off but some other sucker ends up with flammable tap water. If we aspire to be ethical capitalists, we need to think about transactions in a more nuanced way than simply "free markets best markets" or "production good, consumption bad". We need to seriously examine whether the transactions we're entering into are genuine win-win scenarios.
• skybrian 8y ago
  The article is contrived, but the part he gets right is that spending money is exercising power, and it matters how you spend it (or give it away). If you're wealthy then you should think carefully about what you encourage by how you spend your money, to avoid encouraging the wrong things. Once you've spent the money, though, other people will have it, and they have the power to spend it on their wishes. If you assume that people who did the work for you are basically good, this is a good thing. There's nothing wrong with a paycheck. Maybe the problem isn't the money, it's the work? Are you creating bullshit jobs by spending your money on bullshit? But how do you evaluate that? What's honest work anyway? There are jobs are unpleasant and/or dangerous, but still jobs people are happy to have. Office work is comfortable, considering, and yet can be considered "soul-crushing" under some conditions. Maybe the yacht builders enjoy the work and live well? This is all second-guessing other people's decisions at a distance. It's complicated enough that it's tempting to allow the market to hide all these issues under layers of abstraction. You usually don't get to review labor conditions anyway. There are some attempts at breaking the abstractions by adding other abstractions, so we see labels like "fair trade" and so on. This supposedly lets you know what's going on at the other end of the supply chain. It's all fuzzy and reputation-based, though, which provides opportunities for cheating. Maybe cut through the layers of abstraction? Directly hiring people makes you the boss and you get to decide what kind of boss you're going to be. But it's by no means certain you'll be a better boss than average, particularly if you're inexperienced.
  • airstrike 8y ago
    > Maybe cut through the layers of abstraction? Directly hiring people makes you the boss and you get to decide what kind of boss you're going to be. In theory, yes, but then you can't diversify as much as you can by just consuming goods and services provided by different companies and workers.
• mcfunk 8y ago
  The framing of this is all wrong. The problem isn't that developers are overpaid, it's that other industries' laborers have had their work systematically undervalued, all the way down to people performing essential services who can't afford to feed their families on full-time work. However you want to argue about payment/wealth being a problem, ultimately, the idea that workers being compensated "too much" (when definitionally they aren't making as much as their labor's value creates) is the productive thing to focus on is very unhelpful.
  • cleandreams 8y ago
    This is true. The problem is that most jobs have had stagnant wages for decades and developers are an exception. That is where the guilt comes from. But we need income growth like we need other kinds of growth. The transition to carbon free economy is going to be expensive. It's not going to happen if we decide income growth is toxic.
    • airstrike 8y ago
      > The problem is that most jobs have had stagnant wages for decades and developers are an exception. Only if you think "most jobs" really means "Most jobs required unskilled labor in developed nations". China and the rest of Southeast Asia have enjoyed significant wage increase for decades. Developers are an exception to your "most jobs" definition because they are not unskilled labor – well, some require less skill, but those have also not enjoyed the same level of wage upside. The U.S. and all other developing economies (think OECD members) are increasingly "service economies". The high paying jobs are those providing services that require significant skill. Commoditized jobs have been outsourced to Asia following globalization. The U.S. inequality debate is entirely myopic because it compares capital and labor upside in the U.S. without taking into account all the upside the rest of the world has enjoyed.
      • RestlessMind 8y ago
        Why should an American (or any other nationality, for that matter) care about what rest of the world has enjoyed? If a system in place is not serving one well, one is going to be upset no matter what happens elsewhere.
• noahth 8y ago
  > Suppose a genie offers to tweak the world in one of two ways. Either he will (A) double everyone's bank account, or (B) double the amount of food in existence. Which is better for society? Clearly the answer is B, doubling the food. Option A (doubling the money) merely creates more placeholders, more tokens — while option B creates more objects of intrinsic value. In other words, A is a zero-sum change, while B is positive-sum. This thought experiment is mistaken in almost every direction -- first of all it's not zero-sum to double every bank account given the unequal distribution of account balances. Second, and even worse for the point being made, it's wildly untrue to imagine that food is in such short supply that we need to double it. The problem with food is primarily one of distribution! This is where I gave up attempting to see his argument through. There's nothing to be gained by "reasoning" from such poor premises.
• jressey 8y ago
  You gotta take this with a huge dose of ceteris paribus. At best I will give the author 'perceived value' but it is naive to think that money earned == real value to society.
• awkward 8y ago
  Suppose you ruin the Congolese economy - bright young men and women who would have become doctors and engineers become grain farmers to get in on the magic window money train. A landlord who owns a building with a magic window on it becomes rich, runs for office, and implements disastrous social policy. The point isn't that trade is actually bad, the point is that you've become an actor, moral or not, in the congolese economy. The attempt to find a single number that makes you good, and not bad, is simply Calvinism minus the theology. You can find out how good you for the world around your accounting statement as effectively as Anubis could find out by putting your heart on a scale.
• vertexFarm 8y ago
  I found this really frustrating. There isn't any evidence whatsoever presented here--the whole treatise is based on a single outrageously over-simplified hypothetical thought experiment, essentially a "Just-So" story. This is the crux of pseudoscience. It's always a gigantic red flag when an argument about complex real-world phenomena and systems is based entirely upon a work of fiction with no real rigorous observation involved--only anecdotal observation based on one's own personal life experiences. This doesn't work. It ends up like dream logic--you imagine something should work this way in a dream, it seems brilliant at the time, but when you wake up and try it in the real world it suddenly doesn't quite make sense anymore or mesh together properly. Ayn Rand is another big example of this pitfall. It's about as meaningful as making an economic theory based on how it works in Harry Potter. This guy's a psychology and computer linguistics major. That's great, and I'm sure he's got plenty of great ideas, but we computer science people have a bit of an issue with buying our own hype. Society greatly values our skills, many people consider us to be exceptionally bright, so we end up believing ourselves to be general-purpose geniuses much like aging physicists do: http://www.smbc-comics.com/comic/2012-03-21 http://www.smbc-comics.com/comic/2012-03-21 We are not general-purpose geniuses. A little knowledge is a dangerous thing. Intellectual arrogance has caused many an engineer to meddle in things we don't properly understand and it occasionally causes catastrophes, or more often it merely spreads misinformation because most laymen put great value on our thoughts and view tech people as some kind of oracle. In the article he lampshades sophistry early on, but that doesn't magically save it from being sophistry. It is absolutely sophistry, a transparent attempt to assuage some kind of guilt and justify a moral quandary through inventive story telling and evidence-free faux truthseeking. He also calls out late in the article the fact that this thought experiment he's made only covers a single currency and a single commodity, which is an unreasonably simplistic model. The parable doesn't consider bad faith, market manipulation, monopoly, corruption, unsustainable expectations of growth, asymmetrical information, pricing inefficiency, and all sorts of other issues that crop in real life and can't simply be ignored. With a little charisma and eloquence it's pretty easy to make a self-consistent mental model by weaving a fictional story and it feels like truth, but in reality there are unanticipated complications and external interactions that screw things up and totally throw off your conclusions. For instance, in real life there wouldn't be just one guy speculatively buying Congolese grain through a magic portal. There would be lots of speculators in wealthy nations, fueled by riches extracted from all over--including the Congo. What about when their speculative hoarding is actually the force which creates the shortage? Are we being such benevolent, wealthy overlords if we cause a famine, drive up costs, then sell the same product back to them at exorbitant prices through these rent-seeking practices? And speaking about rent, that's when multiple commodities come into play. What happens when our speculative buying-up of resources causes scarcity and makes them spend all their money on food and miss rent? Rent, by the way, which is also being artificially driven up by speculation and is not in line with natural supply / demand-based pricing. Because it's not just being sold as housing, an intrinsically valuable use; it's also being hoarded in order to speculatively extract wealth. People buying houses not because they need shelter, but because they simply expect somebody else to buy it at a higher price later on. Price does not magically match intrinsic value 1:1 at all times, which is an assumption his parable is dependent on. And money being an abstraction does not mean that extracting enormous dollar amounts from a local economy and hoarding it does not hurt that local economy. The amount of money you charge people for goods and services does not directly translate to how much value you've blessed their lives with. Consider our healthcare system. We pay far, far more than any other country, and that wealth is hoarded en masse by insurance companies--essentially speculative, unnecessary middle-men who only add to the cost of utterly essential services which must be bought at any cost--yet the intrinsic value of our healthcare is far lower. We have a very low life expectancy for a first-world country, let alone a superpower: https://ourworldindata.org/the-link-between-life-expectancy-and-health-spending-us-focus https://ourworldindata.org/the-link-between-life-expectancy-... That money sitting in a bank is not proof of our intrinsic value going up. It doesn't always work out that way in reality. So we aren't off the hook yet in our own affairs. Economics is hard. Ethics is hard. We can't handwave it using fairy tales with magic doors. I'm no economist, so I don't want to claim any expertise either. Take all I have just said with an enormous punch of salt, as if you're boiling pasta. I only go into these diatribes to point out when others undeservedly claim authority on a subject. People need to know to view this with appropriate skepticism. People shouldn't make authoritative think-pieces about subjects like this just because their job exposes them to a good amount of math and logical problem-solving, thus causing us to assume we can apply that to anything without significant subject-specific study and actual gathering of observational evidence. Even expert economists do very poorly at predicting and properly understanding the way this all works. This subject defies translation into a simple analogy, and balks at being explained to somebody as if they are five. People who try to do that are usually fooling you and themselves as well.
• 40acres 8y ago
  This article really goes off the rails, so I'll just respond to the original point described in the first paragraph. To the question: are coders worth it? The answer in my opinion is yes. Software engineering in general is a type of labor that is conducive to generating large profits. Building robust software systems has large fixed cost, but once the system is out in the wild it has close to zero marginal cost. The cost of distributing one more app through the app store is pretty low (give or take App store fees). A share of the "profits" will go to the developers, and such developers are highly paid relative to other professions. If you want to do good with your money: spend it. A high level overview by Ray Dialo really helped me understand the boom/bust cycle and how money flows through the economy [0]. Look at China, for years the economy was growing at almost 10% -- driven by the consumption of the new middle class. Now growth is slowing to about 6% and everyone is freaking out, this is because due to higher personal debts China is reducing it's spending. Your spending is someone else income, and a certain % of income is paid out to workers which results in higher wages. I'd say smart (saving, investing) and "ethical" (to your personal beliefs) consumption, along w/ charity, is the best way to morally utilize your wealth. Support the arts by going to a show, support teachers by raising funds for school supplies, renovate your home, support a farmers market. Wealth intrinsically is neutral. It's all up to you. 0: https://www.youtube.com/watch?v=PHe0bXAIuk0 https://www.youtube.com/watch?v=PHe0bXAIuk0
• pesmhey 8y ago
  >The point is, money doesn't have intrinsic value. You can't eat money or use it to plow a field, nor can money babysit your children. It's just a token we've all agreed to accept in exchange for giving up things that do have intrinsic value. We are social animals, and our standing within the tribe is most certainly a resource to be extracted and utilized. How you utilize it is a different discussion, but influence and respect are undeniably parts of our software as human beings. Money is not a token we trade for things that have intrinsic value. We would have traded for these things before money was a thing, under a system of social credit. Everyone knows who's dependable and who sucks in the tribe, since you see and work with them everyday. Now that we're bigger than 200 tribe members, we need an abstraction to determine this: money. The author comes to this conclusion about 4/5 of the way down: >The money you've earned represents value you've contributed to society. I agree with the author throughout most of the article until this thought: >The point is, money spent on consumption is toxic — value-destroying. It's like, yeah, if I eat my cake then of course I can't have it too, but I needed the calories, and the tribe is better off that I had the energy and means to be productive. The whole of section V is just weird to me. It would be like saying 'metabolism is toxic'. I mean, I guess it can be? There are waste products, and there's also energy. It's just a nonsensical conclusion that we get to in an otherwise well-written article. >But as long as we're soul-searching, let's not forget to examine our spending habits as well. Yeah, 100% agree. Thought-provoking read overall.
• airstrike 8y ago
  > The yacht is made of wood, metal, and plastic. Building it requires many thousands of hours of effort. Workers have to find the trees, cut them down, haul the lumber across vast distances, cut it, sand it, polish it, paint it, etc., etc., etc. If you weren't commissioning the yacht, all of those materials and man-hours could be put to other, better uses. For all the good it does the Congolese people, you may as well pay them to build the yacht, then burn it before their eyes. Taking it through the window, into your own possession and for your own consumption, has the same effect. Wow. A lot to unpack here. The author was doing just fine up until this paragraph. What "other, better uses" does the author propose? Better yet, who defines what uses are better or worse? I'm sure those workers who chopped down the wood or built the yacht would much prefer I pay them than a different worker, even if I want to buy the yacht just to watch it burn. The author fails to understand the fundamental principle of Utility[0]. It's intrinsically up to an individual to determine that which has utility for them. > That's why wealth is toxic. As long as someone's money is tucked away in his bank account, we're safe. But the minute it starts to leak out, via consumption, we all become that much worse off. What an outlandish claim. If consumption were to halt entirely, no money would exchange hands and we'd go back to fending for ourselves by foraging and hunting. At some point, we have to stop listening to laymen. This is true of every field, but Economics for some reason seems to be the layman's favorite. I'm not an Economist either, but at least I don't go around pontificating about things I know not to know. –––––––––– ⁰ https://en.wikipedia.org/wiki/Utility https://en.wikipedia.org/wiki/Utility
  • pesmhey 8y ago
    I think the author falls into the 'it's better to have cake than to eat it' camp. Of course wealth in this case is toxic - you miss the point of it.
    • airstrike 8y ago
      > Of course wealth in this case is toxic Says who? That is not an axiomatic truth. You'll need to provide evidence.
      • 8y ago
• james_s_tayler 8y ago
  This is such a bone-headed conclusion. The system is an abstraction of money in -> goods out. It doesn't specify anything about amounts and it places restrictions on goods vary sparingly. If you were to place restrictions on goods out some kind of ideology then where do you stop the restrictions? No yachts, they're wasteful! No luxury cars, they're wasteful! You don't need a bigger TV, the one you have already works. Don't be wasteful! You don't need luxury food. Regular food will do. I mean... you just end up with some god-awful Marxist hell hole of a system that doesn't work very well. No thanks. I'll let the occasional person who has earned just buy their wasteful yacht because in aggregate, over time that seems to accrue the highest benefit to me no matter who I am.
• spencerwgreene 8y ago
  This reminds me of the section "Money Is Not Wealth" from Paul Graham's How to Make Wealth [1]: "The solution societies find, as they get more specialized, is to make the trade into a two-step process. Instead of trading violins directly for potatoes, you trade violins for, say, silver, which you can then trade again for anything else you need. The intermediate stuff-- the medium of exchange-- can be anything that's rare and portable. Historically metals have been the most common, but recently we've been using a medium of exchange, called the dollar, that doesn't physically exist. It works as a medium of exchange, however, because its rarity is guaranteed by the U.S. Government." The "two-step process" part reminds me of pointers, strangely. The metaphor doesn't make much sense though. A dollar points to wealth? Dereferencing a dollar obtains the wealth it points to? [1] http://paulgraham.com/wealth.html http://paulgraham.com/wealth.html
  • lordnacho 8y ago
    It's the atomic compare-and-store operation you're looking for. violing <> dollar dollar <> potato
• vinceguidry 8y ago
  > Suppose a genie offers to tweak the world in one of two ways. Either he will (A) double everyone's bank account, or (B) double the amount of food in existence. Which is better for society? Clearly the answer is B, doubling the food. Option A (doubling the money) merely creates more placeholders, more tokens — while option B creates more objects of intrinsic value. In other words, A is a zero-sum change, while B is positive-sum. This would be incorrect if it turned out that there just wasn't enough money out there to provide sufficient liquidity. This is the reason bitcoin is nearly infinitely subdivisible and the nominal reason why stocks are split. The value of money in general is the convenience value of not having to barter. If the currency has deflated to the point where nobody can use even your smallest denominations, then people will devise an alternative means of exchange that is more down to earth. So it can easily be a not zero-sum action to double the account numbers. It can be worth more than food can in an illiquid environment, because while the demand for food is fixed to the number of people in the world at any given time and that it spoils, money does not spoil and injecting more of it into an economy is a tried and tested stimulus technique. Just doubling the food doesn't necessarily mean that the people that need it are going to get it, something foreign aid organizations are intensely familiar with. > Imagine if, after years of speculating in the Congolese grain market and accumulating millions of francs, you decide to cash out with one final act of buying a yacht through your window (then nailing it shut). Nevermind the logistics of passing a yacht into your living room. The point is it's an incredibly selfish act, and almost perfectly cancels out all the good you did through speculation. Not at all, you're doing the equivalent of Pharaoh building his pyramid tomb, or more prosaically, retiring and spending the rest of your life making bad art. If Pharaoh didn't build his tomb, then Egyptians will think he's weak. The tomb is a symbol of Egypt's wealth and prominence, as is the yacht, and the bourgeois retirement. If you don't exercise the perks of your station, then you're basically saying that you're doing it all for nothing. Capitalist society works precisely because everyone has a selfish motive, it wouldn't work at all if people didn't. The author thinking that money is intrinsically worthless is the same mistake as thinking that yachts are worthless. Symbols, of paper or of success, are important motivators. They have intrinsic value as symbols. If you fail to understand this then you're missing an important piece about how markets reflect human nature. There are areas of the economy where the symbol value of goods far exceeds the utility value of them. Numismatics, fashion, and art pop to mind immediately. These markets can be understood, but not if you don't think symbols can have value.
• paultopia 8y ago
  There's a logical contradiction at the heart of this. If spending money destroys social value and receiving it represents the creation of social value, then every act has to be neutral. When you buy the yacht from the Congo at the end and light it on fire, you can't have destroyed value overall, because, well, the yacht builders got money so clearly they created as much value as you destroyed. (Represented in some weird hedonic sense as the pleasure you got from the burning yacht, perhaps.) Slightly more technical translation of the above: this essay is a great illustration of the vacuity of the revealed preference theory of value, important in economics but widely shredded in every other discipline just because it entails silly consequences like whenever someone pays you to do something that indicates that you did something genuinely valuable for them, an idea that reduces the notion of "valuable" to nothing but observed behavior.
• GoodJokes 8y ago
  Jesus. It is like no one has read Marxist. Surplus value of labor and the exchange value of labor. Capitalism begets speculation and the constant search for more fictitious things to put value on. Read Harvey and why overaccumlation due to not paying workers enough will always be a thing under capitalism. Google the Spatial fix.
• cwkoss 8y ago
  The author of this article seems to fail at differentiating price and value, which seems to be a necessary premise for many of their conclusions.
• zestyping 8y ago
  The fundamental error in this article is the following inference: Satisfying someone else's need is good, therefore having your need satisfied by someone else must be bad. But the real world is not this way at all. Transactions are not zero-sum. It is entirely possible to satisfy someone else's need and have it not cost you as much as it benefits them. Once you realize this, the entire chain of logic falls down.
• rockclimber 8y ago
  What a pile of crap
• rockclimber 8y ago
  This article is a pile of crap. You spend thousands of hours behind the desk, which literally is killing your body, missing out on many of the social interactions, working with some really frustrating shit(remember when we used to do IE6 optimizations? Debugging rxjs ffs), building stuff being useful to thousands, sometimes millions of people. Your brain got infected by omnipresent socialist bullshit and money hating propaganda. Understand it was meant to attack capitalists who don't have to do anything but their money works for them. You're still a slave so stop bitching about getting rewarded for doing something useful. Use your mind potential to come up with a business idea or become a scientist instead of overthinking your little role. Maybe that's why you're still a web developer not an actual scientist or engineer, because you're dumb. Yes, I'm a web dev too. Have been for 11 years now but also building my own online projects. My first years was shit salary and recently it does feel much more rewarding.
• Taniwha 8y ago
  Even worse if money spent on armaments, wars, soldiers and these are used to destroy things it's even more toxic economically - you're not just burning wealth, you're using it to destroy other wealth as well - foreign development aid carefully given benefits everyone far more
• rdiddly 8y ago
  Wealth accumulated by shrewd grain arbitrage represents the the noble reallocation of value to where it's most needed, but wealth accumulated by someone else by building and selling yachts to me represents selfish evil waste? The wood etc. that goes into a yacht could be put to better uses, but the water, fertilizer and land that goes into a sack of grain could find no possible better use? There is no axiom that reconciles these contradictions better than the obvious one: Transactions, and wealth, have no inherent morality. Make any claim beyond that, and you are going to have to resort to the hand-wavy fallaciousness of a disclaimer-ridden argument.
• sytelus 8y ago
  TLDR; don’t feel bad about making obscene money because if someone is paying you that obscene money then you must be delievering that much economic value. An important missing point with author: Money you get tend to represent the value you deliver, not always. In many cases value you delivere is way way off than money you get. For example, lottery winner and a CEO who bankrupts the company while getting golden parachute. This is the reason why the web dev in authors referenced post is wondering if he is being overpaid for drawing boxes on web page. This is right now becoming universal questions for lot of people who live off of passive income or are in exec roles with as much as 1000X compensation. Economy and markets are not perfect. In aggregate and over a long term things might balance out.
• hamilyon2 8y ago
  So, mercantilism all over again? Have we gone a full circle?