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I appreciate this is framed as "incredibly crude approximation", but here's a contrived counter example to try to highlight ugly detail that language such as "p

by shoo 7y ago

I appreciate this is framed as "incredibly crude approximation", but here's a contrived counter example to try to highlight ugly detail that language such as "providing real value" may gloss over: > If you move money around and end up with more than you started, that's because you moved money around in ways that provided real value to people. If I drive the getaway car for my friend's bank heist in return for a 30% cut of the spoils, we can argue I'm moving money around in ways that provide real value to other people (where by "people" we specifically mean my bank-robbing friend). > providing value to the world By "providing value to the world" do we mean "providing value to at least one other person ignoring other parties who may have lost value"? I think as a general rule of thumb it is quite dangerous to conflate "profitable activity" with "providing value to the world".

TheOtherHobbes 7y ago
That's a good point, and one that can't be made often enough. Conventional accounting excludes externalities, including consequential losses to third parties. AirBnB can pride itself on "providing value" but in fact it massively distorts local economies, and has a very detrimental effect on the availability of affordable long-term rentals. Tenants in that market suffer directly because their rents are higher, and there are fewer properties available to them. That's a net cost to them, as a group, and of course it doesn't appear on AirBnB's accounts. If you want to claim you're "providing value" the burden of proof is on you to provide an economic summary that accounts for externalities and is demonstrably non-zero-sum. Doing this realistically would reveal that many corporations are essentially rent-seekers, oligopolists, and trivial arbitrageurs, not value creators. IMO it's going to be impossible to avoid making this change to accounting standards - probably by the middle of the century, at the latest. Which is good, because genuine value creation is a wonderful thing and deserves all the support it can get.

by shoo 7y ago

TheOtherHobbes 7y ago

That's a good point, and one that can't be made often enough. Conventional accounting excludes externalities, including consequential losses to third parties. AirBnB can pride itself on "providing value" but in fact it massively distorts local economies, and has a very detrimental effect on the availability of affordable long-term rentals. Tenants in that market suffer directly because their rents are higher, and there are fewer properties available to them. That's a net cost to them, as a group, and of course it doesn't appear on AirBnB's accounts. If you want to claim you're "providing value" the burden of proof is on you to provide an economic summary that accounts for externalities and is demonstrably non-zero-sum. Doing this realistically would reveal that many corporations are essentially rent-seekers, oligopolists, and trivial arbitrageurs, not value creators. IMO it's going to be impossible to avoid making this change to accounting standards - probably by the middle of the century, at the latest. Which is good, because genuine value creation is a wonderful thing and deserves all the support it can get.