3 ms·
If you produce $5 but can't sell it for $3, is it really $5?
by Rainymood 7y ago
If you produce $5 but can't sell it for $3, is it really $5?
- geofft 7y agoSure. Markets work slowly and capriciously. Part of the deal of taking a salaried job is that you get a paycheck now instead of waiting until you've built something and seeing who's ready to buy it and how much. Even if in the steady state someone will definitely buy it for $5, it's nice to put bread on the table today instead of maybe in a year or two. As with all financial transactions of the form "I'll trade your risky profit in the future for a low-risk profit now," you lose some money, and that money goes to the entity absorbing the risk for you.
- michaelt 7y agoIf I have a Foo I can't use myself, but that will make you $5, and you only offer me $3 for it, have I made $5 or $3?
- mason55 7y agoYou’ve created $3 in value and the person who sells it created $2 in value. Maybe they’re managing the logistics of shipping the Foo or the storefront where a customer finds it. If you can create it and sell it for $5 yourself then you’d do that.
- tsimionescu 7y agoIt depends. If I'm trying to sell an object for 5$ but can only sell it for 3, you're right, I've only produced 3$. However, if I'm working for a company and an object I created gets sold by the company for 5$,but the company is paying me 2$ and the salesman 1$,and declaring 2$ worth of profit, then the salesman and I have obviously produced 5$ worth of value together, but were paid 3$ for our work. Any profitable company by definition does exactly this (and nominally un-profitable ones may be doing the same).