3 ms·

Which part's ignorant? If I pay $10,000 for land and $50,000 in materials and pay $90,000 in labor to produce a building that I sell for $200,000, did I create

Which part's ignorant? If I pay $10,000 for land and $50,000 in materials and pay $90,000 in labor to produce a building that I sell for $200,000, did I create $50,000 in value? $140,000 because for some reason my labor costs count as value creation? $200,000 because all costs count as value creation? [EDIT] Ah, I think I see, you don't like their assigning zero value to changes in distribution of goods. That makes sense.

zajio1am 5y ago
> Which part's ignorant? Statements like: "In a typical transaction, no value is created." > If I pay $10,000 for land and $50,000 in materials and pay $90,000 in labor to produce a building that I sell for $200,000, did I create $50,000 in value? $140,000 because for some reason my labor costs count as value creation? In terms of production (value creation), we consider separately short-term inputs (e.g. materials) compared to long-term resources (capital, labor). In this example i would say that organization as a whole created $140000 in value using its capital and labour and used $90000 to compensate its labor (some other part to compensate capital, pay taxes and so on). This is essentially how GDP is computed, and also how VAT (value-added tax) is taxed.