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Thank you for that comment. It helped me understand that many people do have their own definition of productivity (getting X done per hour) which differs starkl

Thank you for that comment. It helped me understand that many people do have their own definition of productivity (getting X done per hour) which differs starkly from the economic definition of it (GDP per hour). Speaking in economic terms: Being a monopoly potentially increases worker productivity, because they can achieve more revenue per hour worked.

DarylZero 5y ago
Why would you attribute monopoly rents to worker productivity? It doesn't make any sense from a causal perspective.
- pengwing 5y ago
  It doesn't have to, that is probably the largest take-away and also most important aspect when it comes to career advice: Being a 10x engineer at a small, insignificant company without growth potential means that you hardly produce anything at all in economic terms. It's much better to be a 0.5x engineer at FAANG (economically speaking). Your productivity is dominated by the industry and market position of your employer. Don't optimize what shouldn't be done in the first place. Again: productivity = GDP/working hours. Due to more price control the monopoly can increase the numerator, while the denominator remains the same.
  - DarylZero 5y ago
    I mean why would you attribute the "GDP" to the worker if there's no causal connection? > Being a 10x engineer at a small, insignificant company without growth potential means that you hardly produce anything at all in economic terms. It's much better to be a 0.5x engineer at FAANG (economically speaking). That's not the kind of scenario I'm talking about. You're talking about an actual difference in what the worker produces. Not what I mean. Suppose the worker produces a widget while working for a monopolist who controls the distribution channel. Then the worker's productivity is the price P the customer pays for the widget. Now suppose the worker's firm is distinct from the monopolist firm. The worker's firm sells to the monopolist at a lower price, P - X, the monopolist marks it up to P. The worker's causal productivity hasn't changed, the only difference is which people capture the value. If the people capturing monopoly rents are in the same firm as the worker, then the worker's "GDP" is higher. If they're in a different firm, the worker's "GDP" is lower.
    - pengwing 5y ago
      In scenario 1 (monopoly): Only one company with worker w1, price p. prod_1 = punits / hours_w1 In scenario 2 (supplier + monopoly): Let's assume that the second company is not magic, but needs a worker to coordinate with the other company, mark up the price, etc. prod_1 = (p-x)units/hours_w1 prod_2 = x*units/hours_w2 In summary, coordination between suppliers is an extra job which does not increase GDP. Productivity is decreased, because more hours are required to produce the same GDP.

DarylZero 5y ago

Why would you attribute monopoly rents to worker productivity? It doesn't make any sense from a causal perspective.

pengwing 5y ago
It doesn't have to, that is probably the largest take-away and also most important aspect when it comes to career advice: Being a 10x engineer at a small, insignificant company without growth potential means that you hardly produce anything at all in economic terms. It's much better to be a 0.5x engineer at FAANG (economically speaking). Your productivity is dominated by the industry and market position of your employer. Don't optimize what shouldn't be done in the first place. Again: productivity = GDP/working hours. Due to more price control the monopoly can increase the numerator, while the denominator remains the same.
- DarylZero 5y ago
  I mean why would you attribute the "GDP" to the worker if there's no causal connection? > Being a 10x engineer at a small, insignificant company without growth potential means that you hardly produce anything at all in economic terms. It's much better to be a 0.5x engineer at FAANG (economically speaking). That's not the kind of scenario I'm talking about. You're talking about an actual difference in what the worker produces. Not what I mean. Suppose the worker produces a widget while working for a monopolist who controls the distribution channel. Then the worker's productivity is the price P the customer pays for the widget. Now suppose the worker's firm is distinct from the monopolist firm. The worker's firm sells to the monopolist at a lower price, P - X, the monopolist marks it up to P. The worker's causal productivity hasn't changed, the only difference is which people capture the value. If the people capturing monopoly rents are in the same firm as the worker, then the worker's "GDP" is higher. If they're in a different firm, the worker's "GDP" is lower.
  - pengwing 5y ago
    In scenario 1 (monopoly): Only one company with worker w1, price p. prod_1 = punits / hours_w1 In scenario 2 (supplier + monopoly): Let's assume that the second company is not magic, but needs a worker to coordinate with the other company, mark up the price, etc. prod_1 = (p-x)units/hours_w1 prod_2 = x*units/hours_w2 In summary, coordination between suppliers is an extra job which does not increase GDP. Productivity is decreased, because more hours are required to produce the same GDP.