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Some trades are zero. You exchange money for some good or consumable. For example you buy food at a supermarket. If you were to bake a cake with that food an

by sjg007 7y ago

Some trades are zero. You exchange money for some good or consumable. For example you buy food at a supermarket. If you were to bake a cake with that food and sell it then it would be non-zero sum but not if you eat it.

evanpw 7y ago
You'll only pay $X for a good if it's worth at least $X to you, so in the absence of perfect price discrimination, that trade is also positive-sum: https://en.wikipedia.org/wiki/Economic_surplus#Consumer_surplus https://en.wikipedia.org/wiki/Economic_surplus#Consumer_surp...
- g_langenderfer 7y ago
  In other words, if a banana costs $1 and I buy it, its value to me is at least $1
- sjg007 7y ago
  That’s an illusion if you can’t use it directly to make more money. In the abstract sure it’s positive value but for this simulation or any simulation it doesn’t matter.
snowwrestler 7y ago
If there is no difference in value between the money and the food, then why did you exchange the money for the food? Why not just keep your money and skip the trip to the store? Same with the store: why bother selling the food for money? If the value is the same, why doesn’t the store just keep the food and save themselves the trouble?
- sjg007 7y ago
  The store buys low and sells high, that’s the value. The end consumer does not... unless they are baking a cake to sell or something.
  - BlueTemplar 7y ago
    From another angle, why would the customer spend their time (which has value to them) in a transaction where they don't get any?
    - vageli 7y ago
      > From another angle, why would the customer spend their time (which has value to them) in a transaction where they don't get any? Well I for one always took issue with the rational consumer model. It is possible that people trade things they value for things they don't, because people do not always act rationally.
      - BlueTemplar 7y ago
        But we're talking about basic stuff here like buying bread...
        rebuilder 7y ago
        Have you seen the variety of bread available, and the price range thereof? If all of it is purchased on rational valuation grounds, I think we must end up with a fairly loose definition of "value"
        BlueTemplar 7y ago
        I'm sorry, but you still seem to be missing the point ? This isn't about bread varieties either, I would assume that most bread is bought within an order of magnitude of prices.
      - philwelch 7y ago
        That’s a larger discussion but much of the economics of it gets cancelled out with the notion of “revealed preferences”. Economics doesn’t really account for whether an individual consumer is rational for buying junk food, scratch tickets, and liquor; it just sort of observes that you behave as though you want those things and models from there. The internal struggle of will between the “you” who binges on Oreos and store brand vodka and the “you” who wakes up on New Years morning with a hangover and a sincere desire to turn your life around isn’t necessarily within the scope of economics (unless the New Years Day “you” promptly purchases a gym membership that you never show up for!)
- stazz1 7y ago
  The alchemical transformation between needs is in fact what money is for. And money is lost in the transformation due to friction. The computer age is impressive but easily overlooks advances in fields, like Foucault's Order of Things and his presentation of Economic theory. Such awareness would prevent such drastic oversimplifications imo
scottmsul 7y ago
This is incorrect. You agree to trade because you value the food (and eating the food) more than the money. The store agrees to trade because they value the money more than the food. Each side is more satisfied after the trade than before. Hence it's non-zero sum.
- sjg007 7y ago
  It’s not... see https://www.google.com/amp/s/www.thestreet.com/.amp/politics/what-is-a-zero-sum-game-14818535 https://www.google.com/amp/s/www.thestreet.com/.amp/politics...
- XuMiao 7y ago
  If they don't buy it from the store, they have to make it themselves. Everybody are satisfied in the transaction because they played well on this trivial zero sum game instead of falling into a negative sum swirl. By the way, economic concepts are statistics. Arguments are only meaningful on large number of samples or over long period of time.
dwaltrip 7y ago
The transaction has impacts beyond the immediate direct interaction, and those must also be considered. Examples: * The company now has more money for research and development, which will result in the creation of new value. * Demand has been demonstrably increased (from the moment before the transaction), providing a small but real signal that production should increase. Increased production will result in new value being created. And so on. This is all on average, of course. Some companies destroy value through incompetence, ignorance, malicious action, or other mechanisms.

by sjg007 7y ago

evanpw 7y ago

You'll only pay $X for a good if it's worth at least $X to you, so in the absence of perfect price discrimination, that trade is also positive-sum: https://en.wikipedia.org/wiki/Economic_surplus#Consumer_surplus https://en.wikipedia.org/wiki/Economic_surplus#Consumer_surp...

g_langenderfer 7y ago
In other words, if a banana costs $1 and I buy it, its value to me is at least $1
sjg007 7y ago
That’s an illusion if you can’t use it directly to make more money. In the abstract sure it’s positive value but for this simulation or any simulation it doesn’t matter.

snowwrestler 7y ago

If there is no difference in value between the money and the food, then why did you exchange the money for the food? Why not just keep your money and skip the trip to the store? Same with the store: why bother selling the food for money? If the value is the same, why doesn’t the store just keep the food and save themselves the trouble?

sjg007 7y ago
The store buys low and sells high, that’s the value. The end consumer does not... unless they are baking a cake to sell or something.
- BlueTemplar 7y ago
  From another angle, why would the customer spend their time (which has value to them) in a transaction where they don't get any?
  - vageli 7y ago
    > From another angle, why would the customer spend their time (which has value to them) in a transaction where they don't get any? Well I for one always took issue with the rational consumer model. It is possible that people trade things they value for things they don't, because people do not always act rationally.
    - BlueTemplar 7y ago
      But we're talking about basic stuff here like buying bread...
      - rebuilder 7y ago
        Have you seen the variety of bread available, and the price range thereof? If all of it is purchased on rational valuation grounds, I think we must end up with a fairly loose definition of "value"
        BlueTemplar 7y ago
        I'm sorry, but you still seem to be missing the point ? This isn't about bread varieties either, I would assume that most bread is bought within an order of magnitude of prices.
    - philwelch 7y ago
      That’s a larger discussion but much of the economics of it gets cancelled out with the notion of “revealed preferences”. Economics doesn’t really account for whether an individual consumer is rational for buying junk food, scratch tickets, and liquor; it just sort of observes that you behave as though you want those things and models from there. The internal struggle of will between the “you” who binges on Oreos and store brand vodka and the “you” who wakes up on New Years morning with a hangover and a sincere desire to turn your life around isn’t necessarily within the scope of economics (unless the New Years Day “you” promptly purchases a gym membership that you never show up for!)
stazz1 7y ago
The alchemical transformation between needs is in fact what money is for. And money is lost in the transformation due to friction. The computer age is impressive but easily overlooks advances in fields, like Foucault's Order of Things and his presentation of Economic theory. Such awareness would prevent such drastic oversimplifications imo

scottmsul 7y ago

This is incorrect. You agree to trade because you value the food (and eating the food) more than the money. The store agrees to trade because they value the money more than the food. Each side is more satisfied after the trade than before. Hence it's non-zero sum.

sjg007 7y ago
It’s not... see https://www.google.com/amp/s/www.thestreet.com/.amp/politics/what-is-a-zero-sum-game-14818535 https://www.google.com/amp/s/www.thestreet.com/.amp/politics...
XuMiao 7y ago
If they don't buy it from the store, they have to make it themselves. Everybody are satisfied in the transaction because they played well on this trivial zero sum game instead of falling into a negative sum swirl. By the way, economic concepts are statistics. Arguments are only meaningful on large number of samples or over long period of time.

dwaltrip 7y ago

The transaction has impacts beyond the immediate direct interaction, and those must also be considered. Examples: * The company now has more money for research and development, which will result in the creation of new value. * Demand has been demonstrably increased (from the moment before the transaction), providing a small but real signal that production should increase. Increased production will result in new value being created. And so on. This is all on average, of course. Some companies destroy value through incompetence, ignorance, malicious action, or other mechanisms.