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I'm of the opinion this understates the problem. First, it is an ethical problem. The idea of producing things is not taught in elite colleges, nor is the idea

by Jd 16y ago

I'm of the opinion this understates the problem. First, it is an ethical problem. The idea of producing things is not taught in elite colleges, nor is the idea that it is possible to make a positive contribution to society (e.g. rms) without becoming superrich (no offense to those for whom this is their primary motivation). Second, a lot of the products of which the GDP percentage is based upon simply involve repackaging and selling debt. (e.g. http://ow.ly/1sf8Rp http://ow.ly/1sf8Rp ). In other words, a lot of the economy is based upon accounting tricks.

secretasiandan 16y ago
Not all ideas can or should be taught in (elite) colleges. The framework to analyze any idea should be and generally is taught at colleges. Repackaging and selling things is foundational to creating value. The insurance industry is perhaps the quintessential example. They create no direct expected value, and yet they create societal benefit by creating risk-adjusted expected value. What is manufacturing but repackaging?
- jbooth 16y ago
  Fair enough, but culture matters. When you're surrounded by a culture of people who glorify rent-seeking jobs like finance and lawyering, "building stuff" tends to be regarded as lower-status and as such gets less of the top talent, even though it's the most important thing.
- maigret 16y ago
  Insurance creates value, and so do banks. The problem really begins when the banks try to get more revenue than the value they can possibly generate. That's when it goes into bubbles and finally breaks. Insurance has its risks also, but the insurance system doesn't crash every couple years from itself (major natural events, terrorist attacks etc not taken into account).
hammock 16y ago
Repackaging debt is not an "accounting trick," it's creating liquidity. Which in turn allows more more "real" transactions to take place, more trade, more production, more manufacturing, more jobs, etc.
- chopsueyar 16y ago
  So far, so good.
- mattdeboard 16y ago
  It's an accounting trick that artificially stimulates the economy by tricking people into thinking their imaginary dollars are worth more real goods than they actually are.

by Jd 16y ago

secretasiandan 16y ago

Not all ideas can or should be taught in (elite) colleges. The framework to analyze any idea should be and generally is taught at colleges. Repackaging and selling things is foundational to creating value. The insurance industry is perhaps the quintessential example. They create no direct expected value, and yet they create societal benefit by creating risk-adjusted expected value. What is manufacturing but repackaging?

jbooth 16y ago
Fair enough, but culture matters. When you're surrounded by a culture of people who glorify rent-seeking jobs like finance and lawyering, "building stuff" tends to be regarded as lower-status and as such gets less of the top talent, even though it's the most important thing.
maigret 16y ago
Insurance creates value, and so do banks. The problem really begins when the banks try to get more revenue than the value they can possibly generate. That's when it goes into bubbles and finally breaks. Insurance has its risks also, but the insurance system doesn't crash every couple years from itself (major natural events, terrorist attacks etc not taken into account).

hammock 16y ago

Repackaging debt is not an "accounting trick," it's creating liquidity. Which in turn allows more more "real" transactions to take place, more trade, more production, more manufacturing, more jobs, etc.

chopsueyar 16y ago
So far, so good.
mattdeboard 16y ago
It's an accounting trick that artificially stimulates the economy by tricking people into thinking their imaginary dollars are worth more real goods than they actually are.