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"When someone is obsessed with accumulating wealth, it tends to be a never-ending pursuit. " Wealth creation is not value creation. Just because you put money

"When someone is obsessed with accumulating wealth, it tends to be a never-ending pursuit. " Wealth creation is not value creation. Just because you put money in your account, does not mean you 'grew the pie' - in fact - you can generate a lot of wealth individually, while shrinking the overall pie. For example, some kinds of resource extraction do more environmental damage than the profits generated. 'Good Capitalism' creates a ton of value for society, and then captures some of those surpluses. 'Negative Capitalism' just grabs surpluses by whatever means: leverage, legalities, etc.. The problem is we generally don't have a language for distinguishing between the two. As of today, I believe everything related to blockchain is 'bad capitalism' - in that, the externalities and effort are not worth the benefits (though that could change). My mother was complaining yesterday about the volume of ads on Facebook - while I think ads are ok, when people are locked in and deluged, its starts to corrode the net value of a situation. 'The Web' and 'Google' probably create a lot of value. 'Facebook' and 'Blockchain' ... more dubious. Because of the ridiculous amount of money available to be made in net-zero games, even respectable VC's have to pay attention. It definitely bothers me that there is no language of distinction in the SV. Finally, yes, greed is a quixotic motivator, and sometimes it actually does help.

throwaway34241 5y ago
> The problem is we generally don't have a language for distinguishing between the two. There is a language for this sort of stuff, it's part of economics, they just don't teach people much of it by default in our public school system. I think some of the terms you're looking for are productivity, rent-seeking, etc. More and more I think economics should be a bigger component of K-12 education even if it means pushing out some things to college like chemistry or calculus (or really, even CS). Basically all the wealthy first world countries are social democracies, with a large role for government spending/regulation in addition to the private sector. Getting more people to see the economy through an economic lens (as a complex series of cause-effect relationships and not a more simple story like "who are the bad people", which politics often devolves to) might help us as a country better connect the actions we need to take to the outcomes we desire.
- jollybean 5y ago
  Unfortunately, we don't have a language for this even in the domain of economics. The difference between zero-sum wealth capture, and 'growing the pie' is a point of discussion, yes, but it's rarely discussed and we don't do any real discrimination on it. Where is the economists lists of businesses that create the most surplus value? Imagine if we did valuation by consumer surplus, instead of stock value. None of that is part of the discussion. We generally don't even tax differently between those who extract and those who generate surpluses. Of course, it's a very difficult thing to measure.
  - throwaway34241 5y ago
    I'll try to explain the terms I think apply here - I'm not an economist but I find the subject very interesting and so read about it a fair amount. I think what you call "value creation" (growing the total size of the pie) is what economists would call "productivity", and it doesn't include zero-sum wealth capture. The idea that productivity is ultimately what makes a country prosperous and not money or gold I believe dates back to Adam Smith's "An Inquiry into the Nature and Causes of the Wealth of Nations". If you look at the shortest intro to modern macroeconomics that I know of [1], productivity is still basically the first thing mentioned. The opposite of growing the pie is rent-seeking [2] - trying to get a bigger piece for yourself without growing it. Businesses that face a lot of competition have trouble just unilaterally taking a big piece of the pie, so the focus on this is businesses that are monopoly-like (or at least have a lot of market power). I think some of the courtroom arguments in the ongoing Apple vs Epic trial are essentially about value creation vs rent-seeking. But these two factors tie in to many aspects of public policy - when making projections about the effect of corporate tax rate changes on growth, economists are probably estimating what percent of profits are due to monopoly rent. The reason for doing infrastructure investment is long-run productivity growth. Some countries have implemented a land-value tax because it falls on rent instead of value-creation. The more I learn about economics, the more I feel that our (economic) problems don't really stem from a lack of effort on the part of economists to understand things - I think the obvious things have usually been considered already (although many things are hard to measure). More often the problem seems to stem from sound economic advice just getting ignored by our political processes. [1] https://www.economicprinciples.org/ https://www.economicprinciples.org/ [2] https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking

throwaway34241 5y ago

> The problem is we generally don't have a language for distinguishing between the two. There is a language for this sort of stuff, it's part of economics, they just don't teach people much of it by default in our public school system. I think some of the terms you're looking for are productivity, rent-seeking, etc. More and more I think economics should be a bigger component of K-12 education even if it means pushing out some things to college like chemistry or calculus (or really, even CS). Basically all the wealthy first world countries are social democracies, with a large role for government spending/regulation in addition to the private sector. Getting more people to see the economy through an economic lens (as a complex series of cause-effect relationships and not a more simple story like "who are the bad people", which politics often devolves to) might help us as a country better connect the actions we need to take to the outcomes we desire.

jollybean 5y ago
Unfortunately, we don't have a language for this even in the domain of economics. The difference between zero-sum wealth capture, and 'growing the pie' is a point of discussion, yes, but it's rarely discussed and we don't do any real discrimination on it. Where is the economists lists of businesses that create the most surplus value? Imagine if we did valuation by consumer surplus, instead of stock value. None of that is part of the discussion. We generally don't even tax differently between those who extract and those who generate surpluses. Of course, it's a very difficult thing to measure.
- throwaway34241 5y ago
  I'll try to explain the terms I think apply here - I'm not an economist but I find the subject very interesting and so read about it a fair amount. I think what you call "value creation" (growing the total size of the pie) is what economists would call "productivity", and it doesn't include zero-sum wealth capture. The idea that productivity is ultimately what makes a country prosperous and not money or gold I believe dates back to Adam Smith's "An Inquiry into the Nature and Causes of the Wealth of Nations". If you look at the shortest intro to modern macroeconomics that I know of [1], productivity is still basically the first thing mentioned. The opposite of growing the pie is rent-seeking [2] - trying to get a bigger piece for yourself without growing it. Businesses that face a lot of competition have trouble just unilaterally taking a big piece of the pie, so the focus on this is businesses that are monopoly-like (or at least have a lot of market power). I think some of the courtroom arguments in the ongoing Apple vs Epic trial are essentially about value creation vs rent-seeking. But these two factors tie in to many aspects of public policy - when making projections about the effect of corporate tax rate changes on growth, economists are probably estimating what percent of profits are due to monopoly rent. The reason for doing infrastructure investment is long-run productivity growth. Some countries have implemented a land-value tax because it falls on rent instead of value-creation. The more I learn about economics, the more I feel that our (economic) problems don't really stem from a lack of effort on the part of economists to understand things - I think the obvious things have usually been considered already (although many things are hard to measure). More often the problem seems to stem from sound economic advice just getting ignored by our political processes. [1] https://www.economicprinciples.org/ https://www.economicprinciples.org/ [2] https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking