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This is a philosophical piece, the fact that it's really basic stuff is exactly why an entire blog post (better yet, a journal article or book) should be writte

This is a philosophical piece, the fact that it's really basic stuff is exactly why an entire blog post (better yet, a journal article or book) should be written to bicker over those semantics. Those financial terms are loaded with meaning and the author believes that meaning to be invalid; the semantics are the entire point. What does it mean to 'create value'? As a passive shareholder who does nothing but own shares that increase in value, have you actually created anything? How can you have created value without creating anything? If Alice values potatoes at 1.01 apples and Bob values apples at 1.01 potatoes, and they trade, maybe they've created 0.01 apples worth of value but they certainly have not created two, they started with two and ended with approximately two. If they change their mind and trade back, they've not created 0.02 apples worth of value, they've revealed that the whole thing was a waste of time. If the value of your time is $14.95 an hour, and you get an Amazon job making $15 an hour, Amazon's addition to the economy is $0.05 per hour not $15. No, it's the farmer who starts with dirt, water, sunshine and diesel and grows the apples and potatoes who is creating value. "Efficiency of resource allocation" are a lot of big words that do little more than justify the speaker diverting a little of the revenue stream to themselves. Money is only very loosely connected to value creation, because there are two separate factors that tie them together: The amount of value your work adds to society, and your ability to extract money from society. The whole point is that no human, not even Jeff Bezos, can generate 200 billion dollars worth of value by working. Not by carrying a lot of boxes really fast, nor by thinking really hard, nor by working long hours; not even if he pushes even more boxes while thinking really bright ideas while saving time by peeing in a bottle instead of going to the bathroom, he's simply not that many orders of magnitude smarter or stronger or more dedicated than other humans. And yet his net worth is close enough to $200B that it makes sense to round up about $1.7 billion dollars worth of value, while other people are carrying boxes for $15 an hour and are orders of magnitude away from rounding up to a net worth of $0.1 billion dollars. The disparity between value generated and money extracted is the core injustice that the open letter glosses over with casual semantics and that the article seeks to understand and expose by being unconventionally precise.

simonh 6y ago
>they've not created 0.02 apples worth of value, they've revealed that the whole thing was a waste of time If you select an example with almost identically substitutable goods, no wonder you miss the point. Lets use oranges and sausages in the example instead. Now we're trading meat for fruit. What's the value to you of not dying of scurvy or protein deficiency? Identifying imbalances in supply and demand, and working out how to resolve them creates huge value, otherwise all trade would be pointless. That's where investors and business owners come in. They identify an imbalance in supply and demand between the labour of employees and the needs of customers. Sure the employees could do that themselves, and that's fine. It's not as if it's illegal, good luck to them. Power to the people. But the point is somebody has to do it and it absolutely creates value.
- SuoDuanDao 6y ago
  Sometimes I get concerned by how unabashedly people put forward frankly socialist talking points in public discourse these days. But then I see how incredibly common sense refutations by people like yourself are, and feel a little less worried.
  - simonh 6y ago
    Well, I don’t think socialists are completely wrong about everything. It’s just that particularly in economics the basic theory they’re working from is deeply flawed. On the other hand while market forces are incredibly powerful, they’re not an end in themselves. Both capitalism and socialism taken to ideological extremes can be incredibly dangerous and harmful, but the ideas in both have plenty to offer.
- jay_kyburz 6y ago
  >Identifying imbalances in supply and demand, and working out how to resolve them creates huge value, otherwise all trade would be pointless. Yes sure, but to have claimed to "create" the value, it can't simply be taken from someone else. If other people were already selling apples and sausages and you move in a put them out of business then you haven't created anything, you have just captured and monetized value for your own shareholders. Whats more, If the folks that used to sell apples, also sold bananas, but you drove them out of business, and now bananas are no longer available, value may have been lost.

simonh 6y ago

>they've not created 0.02 apples worth of value, they've revealed that the whole thing was a waste of time If you select an example with almost identically substitutable goods, no wonder you miss the point. Lets use oranges and sausages in the example instead. Now we're trading meat for fruit. What's the value to you of not dying of scurvy or protein deficiency? Identifying imbalances in supply and demand, and working out how to resolve them creates huge value, otherwise all trade would be pointless. That's where investors and business owners come in. They identify an imbalance in supply and demand between the labour of employees and the needs of customers. Sure the employees could do that themselves, and that's fine. It's not as if it's illegal, good luck to them. Power to the people. But the point is somebody has to do it and it absolutely creates value.

SuoDuanDao 6y ago
Sometimes I get concerned by how unabashedly people put forward frankly socialist talking points in public discourse these days. But then I see how incredibly common sense refutations by people like yourself are, and feel a little less worried.
- simonh 6y ago
  Well, I don’t think socialists are completely wrong about everything. It’s just that particularly in economics the basic theory they’re working from is deeply flawed. On the other hand while market forces are incredibly powerful, they’re not an end in themselves. Both capitalism and socialism taken to ideological extremes can be incredibly dangerous and harmful, but the ideas in both have plenty to offer.
jay_kyburz 6y ago
>Identifying imbalances in supply and demand, and working out how to resolve them creates huge value, otherwise all trade would be pointless. Yes sure, but to have claimed to "create" the value, it can't simply be taken from someone else. If other people were already selling apples and sausages and you move in a put them out of business then you haven't created anything, you have just captured and monetized value for your own shareholders. Whats more, If the folks that used to sell apples, also sold bananas, but you drove them out of business, and now bananas are no longer available, value may have been lost.