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Shipping goods from one place where they're available to another where they're needed is definitely a way to add work and create value, I don't dispute that at

Shipping goods from one place where they're available to another where they're needed is definitely a way to add work and create value, I don't dispute that at all! It's pretty obvious that fish slowly going bad on a boat is worth little, and that driving an expensive reefer truck to get it from there to a grocery store (and subsequently, for the fishmonger to process and package it) is a valuable, constructive process. However, for something closer to the real world, if you set up a regulatory system where you're the only one with the registration needed to sell fish, then you buy 1000 kg of frozen Tilapia from fishermen at $2/kg, hire a freight company to drive it a few dozen miles from the docks to the packing plant for $300, spend $300 to have it inspected, and sell it to the packer at $4/kg, have you really added anything? You've made $1400 profit, but you've barely lifted a finger to make some phone calls. That's not 'value creation' or a unique skill in 'identifying supply and demand', you're abusing market inefficiency to rip people off and undeservingly make yourself richer. And then to pat yourself on the back at the end and say you created value equal to the fishermen's profit plus the $600 of services you bought + your own $1400 profit is just adding insult on injury. Doing calculations using prices is easy, but we can do better than to take them at face value. Amazon is clearly doing something useful, yes, but not $301B worth of useful. They're also positioning themselves to take more money out of the connection they've established between buyer and seller than the shipping, processing, and warehousing costs.

Aunche 6y ago
>if you set up a regulatory system where you're the only one with the registration needed to sell fish This doesn't happen though. There's nothing stopping you from setting up your own fish whole selling company if you think that is lucrative. Sure there will be regulatory hurdles, but if you can make a case that you can do it for cheaper while still making a profit, you can find an investor to pay for your lawyers. The fisherman wants to sell all their fish with a price that they know in advanced. However, the packer only wants to the fish that they know that they can sell to supermakets, and doesn't want to buy more than they have to. Without someone assuming the risk of holding a bunch of frozen fish for a long time, the fisherman wouldn't being fishing as much, which means less fish ends up with the customer, and less value being created.
- rrrrrrrrrrrryan 6y ago
  > if you set up a regulatory system where you're the only one with the registration needed to sell fish > This doesn't happen though This happens all the time. The point isn't that it's literally impossible to compete, the point is that there's a large barrier to competition that provides no value to anyone other than the entity that created it. Time and money was spent to intentionally make the market less inefficient, so that the newly inefficient market could be exploited thereafter. Yes, a new entity could then decide to invest time and money to try to jump over the new hurdle, or toward tearing the hurdle down. But all those man-hours and all that money spent on lawyers could've been put toward something else that creates actual value to a wider slice of society.
  - Aunche 6y ago
    Of course market inefficiencies exist, but their impact is much smaller than what critics of capitalism like to imply. Amazon and fishing operate in a market with plenty of competition. My point is that the value that a fish futures owner holds is real.
- deleted 6y ago
  [deleted]
skybrian 6y ago
Well, counterfactuals are tricky. In the fish example, if you compare to nobody selling fish at all, they are adding value by creating a market where there wasn't any before, even if it's in a monopolistic way. But if your alternative is a competitive fish market, maybe no value is added, but the monopoly is charging more for it. Charging more is capturing consumer surplus value. If it weren't still worth the money, they wouldn't pay for the fish. The higher price more accurately reflects that value of the product to the people who still buy it. (Assuming they know what they're doing.) Whether or not charging more is good or not depends on your point of view. Buyers and sellers have different opinions. I believe "charge more" is a slogan generally repeated approvingly around here when we're talking about developer salaries? Here's an example of capturing consumer value that's considered relatively benign, good even: you can listen to a lot of music for free these days, but then Patreon came along and convinced a lot of people that artists should be paid more. The market price in a perfectly competitive market is that music should be free, but sometimes the fans themselves disagree with that. It doesn't seem like there is any objective truth to the matter as to how much music is worth. There are only opinions. Sometimes you can do some math, but the input is opinions, so the output is aggregate opinions. The same seems true of other prices. Costs usually set a floor. Consumer value is higher than that, but people disagree on what's "worth it."

Aunche 6y ago

>if you set up a regulatory system where you're the only one with the registration needed to sell fish This doesn't happen though. There's nothing stopping you from setting up your own fish whole selling company if you think that is lucrative. Sure there will be regulatory hurdles, but if you can make a case that you can do it for cheaper while still making a profit, you can find an investor to pay for your lawyers. The fisherman wants to sell all their fish with a price that they know in advanced. However, the packer only wants to the fish that they know that they can sell to supermakets, and doesn't want to buy more than they have to. Without someone assuming the risk of holding a bunch of frozen fish for a long time, the fisherman wouldn't being fishing as much, which means less fish ends up with the customer, and less value being created.

rrrrrrrrrrrryan 6y ago
> if you set up a regulatory system where you're the only one with the registration needed to sell fish > This doesn't happen though This happens all the time. The point isn't that it's literally impossible to compete, the point is that there's a large barrier to competition that provides no value to anyone other than the entity that created it. Time and money was spent to intentionally make the market less inefficient, so that the newly inefficient market could be exploited thereafter. Yes, a new entity could then decide to invest time and money to try to jump over the new hurdle, or toward tearing the hurdle down. But all those man-hours and all that money spent on lawyers could've been put toward something else that creates actual value to a wider slice of society.
- Aunche 6y ago
  Of course market inefficiencies exist, but their impact is much smaller than what critics of capitalism like to imply. Amazon and fishing operate in a market with plenty of competition. My point is that the value that a fish futures owner holds is real.
deleted 6y ago
[deleted]

skybrian 6y ago

Well, counterfactuals are tricky. In the fish example, if you compare to nobody selling fish at all, they are adding value by creating a market where there wasn't any before, even if it's in a monopolistic way. But if your alternative is a competitive fish market, maybe no value is added, but the monopoly is charging more for it. Charging more is capturing consumer surplus value. If it weren't still worth the money, they wouldn't pay for the fish. The higher price more accurately reflects that value of the product to the people who still buy it. (Assuming they know what they're doing.) Whether or not charging more is good or not depends on your point of view. Buyers and sellers have different opinions. I believe "charge more" is a slogan generally repeated approvingly around here when we're talking about developer salaries? Here's an example of capturing consumer value that's considered relatively benign, good even: you can listen to a lot of music for free these days, but then Patreon came along and convinced a lot of people that artists should be paid more. The market price in a perfectly competitive market is that music should be free, but sometimes the fans themselves disagree with that. It doesn't seem like there is any objective truth to the matter as to how much music is worth. There are only opinions. Sometimes you can do some math, but the input is opinions, so the output is aggregate opinions. The same seems true of other prices. Costs usually set a floor. Consumer value is higher than that, but people disagree on what's "worth it."