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This is an interesting article but it starts off on the wrong foot for me: > This is patently ridiculous. Every single dollar of compensation paid out is done

This is an interesting article but it starts off on the wrong foot for me: > This is patently ridiculous. Every single dollar of compensation paid out is done transactionally: it is used to purchase labor. In a typical transaction, no value is created. This, as I understand it in a limited fashion, is not true. There is a concept of the velocity of money in which more value than the initial transaction is created: https://en.wikipedia.org/wiki/Velocity_of_money https://en.wikipedia.org/wiki/Velocity_of_money This is, in part I believe, why a nation's GDP can exceed it's nominal cash in circulation. In particular, the Great Depression was a period of low monetary velocity and yet staggering inflation; the term "stagflation" (stagnation + inflation) was coined to describe this phenomena. https://en.wikipedia.org/wiki/Stagflation https://en.wikipedia.org/wiki/Stagflation Which in turn calls into question the following criticism: > But however you look at it, taking full credit for every single dollar of compensation as value creation— as if Amazon, and not the US Mint, created those dollars, and as if the many, many millions of hours of labor consumed by the company in return were valueless— is a ghastly overstatement. While I would never want to make it seem like Amazon is some sort of altruistic entity who simply makes the lives of those on it's payroll better, it is not as ghastly an overstatement as claimed. There is a reason recovery from the Great Depression involved job creation through The New Deal and war-time production and not simply the US Treasury "creating those dollars". These kinds of economic inconsistencies continue throughout the post. In particular there seems to be a pervasive belief that Monetary Supply is finite/controlled by the Federal Reserve and therefore cannot be used to measure value creation: > But the value you created isn’t the money. The money already existed and was floating around the economy long before you picked up the brush. The value you created was in the art, which is now in someone else’s hands. This is a false premise. Dollar-value estimations of created value like GDP are often imperfect measurements, but they do exist; furthermore, they often exceed the nominal amount of financial notes in circulation. There also certainly is additional value that isn't captured by a dollar value, such as the value an owner places on a created piece of art, but that is not the same as no monetary value created. I don't know who the author is, but even my limited grasp of economic theory makes me question the main thrust of their arguments. But I also know my grasp of economic theory is threadbare at best, so perhaps I am completely off base.

ezrast 5y ago
You're not off base. I have no economic credentials and my discussion of the subject was simplistic. I appreciate your analysis. The point I was trying to make wasn't that dollars shouldn't be used to measure value, but that if you're going to do so, those dollars need to actually correspond to something that isn't just pieces of paper or bits in a bank computer. It's not particularly interesting for $450 dollars to change hands in a vacuum; the transaction is given meaning because it represents something about the painting that was created and sold. Similarly, velocity of money is given meaning because of the premise that each transaction functions to optimize resource distribution (i.e. a typical trade is in the interest of both parties). If the farmer and the mechanic from the Wikipedia article were to game the system by continuing to sell the same $40 of corn to each other over and over, velocity of money would technically increase, but then it would no longer meaningfully represent the health of the economy. The validity of the measure depends on this sort of double counting being precluded or accounted for (at least, in principle it does; I have no idea how much this kind of confounding factor shows up in real life). The biggest intended takeaway of my post wasn't even that the dollars being discussed don't correspond to anything, it's that they correspond to a bunch of different types of thing that don't sum together cleanly. That I had to make a bunch of finer economic points to get there was kind of an accident, and one that I might reframe the article to avoid if I were to rewrite it today.
- gshulegaard 5y ago
  Hmmm! Well thank you for your response! I think that I find myself far more in agreement with this additional detail. > It's not particularly interesting for $450 dollars to change hands in a vacuum; the transaction is given meaning because it represents something about the painting that was created and sold. And this: > The biggest intended takeaway of my post wasn't even that the dollars being discussed don't correspond to anything, it's that they correspond to a bunch of different types of thing that don't sum together cleanly. In particular resonate with me. This intended meaning I (personally) lost in the economic semantics. Hopefully my comment about not wanting to paint Amazon as some altruistic entity alluded to my own personal nuanced feelings here, but to expand on something that I think is more aligned with the point you were trying to make: There is no doubt in my mind that the employment opportunities generated by Amazon provide value to the economy at large, but that doesn't mean that the value is as great as it could, would, or even should be. I think that there is a fair argument to be made that the labor practices at Amazon strays into labor exploitation and they only can do so since they benefit from an non-competitive market dynamic. And that bigger picture is potentially one of the bigger pieces of context which isn't captured by a simple payroll figure.

ezrast 5y ago

You're not off base. I have no economic credentials and my discussion of the subject was simplistic. I appreciate your analysis. The point I was trying to make wasn't that dollars shouldn't be used to measure value, but that if you're going to do so, those dollars need to actually correspond to something that isn't just pieces of paper or bits in a bank computer. It's not particularly interesting for $450 dollars to change hands in a vacuum; the transaction is given meaning because it represents something about the painting that was created and sold. Similarly, velocity of money is given meaning because of the premise that each transaction functions to optimize resource distribution (i.e. a typical trade is in the interest of both parties). If the farmer and the mechanic from the Wikipedia article were to game the system by continuing to sell the same $40 of corn to each other over and over, velocity of money would technically increase, but then it would no longer meaningfully represent the health of the economy. The validity of the measure depends on this sort of double counting being precluded or accounted for (at least, in principle it does; I have no idea how much this kind of confounding factor shows up in real life). The biggest intended takeaway of my post wasn't even that the dollars being discussed don't correspond to anything, it's that they correspond to a bunch of different types of thing that don't sum together cleanly. That I had to make a bunch of finer economic points to get there was kind of an accident, and one that I might reframe the article to avoid if I were to rewrite it today.

gshulegaard 5y ago
Hmmm! Well thank you for your response! I think that I find myself far more in agreement with this additional detail. > It's not particularly interesting for $450 dollars to change hands in a vacuum; the transaction is given meaning because it represents something about the painting that was created and sold. And this: > The biggest intended takeaway of my post wasn't even that the dollars being discussed don't correspond to anything, it's that they correspond to a bunch of different types of thing that don't sum together cleanly. In particular resonate with me. This intended meaning I (personally) lost in the economic semantics. Hopefully my comment about not wanting to paint Amazon as some altruistic entity alluded to my own personal nuanced feelings here, but to expand on something that I think is more aligned with the point you were trying to make: There is no doubt in my mind that the employment opportunities generated by Amazon provide value to the economy at large, but that doesn't mean that the value is as great as it could, would, or even should be. I think that there is a fair argument to be made that the labor practices at Amazon strays into labor exploitation and they only can do so since they benefit from an non-competitive market dynamic. And that bigger picture is potentially one of the bigger pieces of context which isn't captured by a simple payroll figure.