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It's a common refrain that people get rich by providing value to others, and I used to think that way as well. Unfortunately I don't think it really stands scr

It's a common refrain that people get rich by providing value to others, and I used to think that way as well. Unfortunately I don't think it really stands scrutiny. First of all, there's no proper idea of what value is. It's a super deep conversation so I'll just leave that headline for now. Second, even without a clear explanation of what value is, we can distinguish between value created and value captured. You can easily come up with cases where multiple people have done more or less the same thing but one guy gets more out of it than others. Is that the system we want? Third, even without an explanation of what value is, we can see that there are people who provide no value but get paid a heck of a lot. Heirs, scam artists of various sorts. Not just straight give-you-nothing for something thieves, but also plenty of way overpaid people who live in the space between totally honest trading and totally dishonest thievery.

jokethrowaway 5y ago
Value is a self defining concept. It's what an individual want. The value of a society is the weighted sum of values based on individual power. Amazon is creating a lot of small value to a lot of people by delivering goods next day. People on wall street are creating a lot of value for wealthy and powerful people. An engineer can automate a lot of value creation that was previously done by a large number of people, allowing companies to have a shot at making a lot of money, hence why they're paid more. Some of those powerful and wealthy people got rich by providing value, some of them got rich by exploiting the government's centralised power, its corruption and the possibility of stealing value from all the taxpayers. A scam is a crime on par with stealing or charging taxes. Stealing doesn't create value, it just transfer wealth.
- Retric 5y ago
  Value isn’t what people want. People want drinking water more than just about anything else, but that’s cheap to provide so the cost stays low. Gold on the other hand is rarely something people consider or want, but it’s rare therefore it has high material value.
  - HPsquared 5y ago
    Value of everything, including money, is subjective and situational. For a "win-win" transaction (which is the case if everyone is free to choose) you need: (Value to buyer) > (value of sale price to buyer) And: (Value of Sale price to seller) > (Cost to the seller) If I buy a computer for $1000, the computer is worth more to me than the $1000. To the seller, the $1000 is worth more to them than the computer. Value has been created for both parties.
    - Retric 5y ago
      That’s extremely oversimplified and irrelevant to my point. Expectations of being able to pay less impacts what people are willing to pay for something. In a transaction, Value defined for the buyer based on the expectation of personal utility and a seller based on their expectation of the market and their personal utility. The actual cost and actual value to buyer are largely irrelevant. Basically, buyers lack complete information so they will make purchases where (Value to buyer) < (value of sale price to buyer) etc, and of course sellers have the same issue.
  - leetcrew 5y ago
    the price of water isn't really subject to market forces though; it's usually provided by a regulated utility or directly by the government. based on the existence of lawns in arid places, I'd argue water is mispriced. in this particular case, it seems better than the alternative where poor people can't afford drinking water.
    - Retric 5y ago
      Water isn’t always provided by a regulated utility especially historically. It’s never been particularly expensive compared to gold, silver, etc.
dangerface 5y ago
> Is that the system we want? Perfect is the enemy of good, we wan't a system we can change and improve, communism failed because of the great stagnation the leaders in change had no interest in change or improving and the workers underneath them had no means to affect change. Worker parties offer the optics of democracy that the workers have a say in their work but in reality that didn't happen the workers worked for their boss or starved. Under capitalism you have the same options work or starve but you also get a third option, you can compete against your boss it was ultimately this competition that allowed capitalism to change and improve where communism stagnated. Does capitalism guarantee success 100% of the time? nope, but it does provide a mechanism to affect change from the bottom up, other systems don't do that.

jokethrowaway 5y ago

Value is a self defining concept. It's what an individual want. The value of a society is the weighted sum of values based on individual power. Amazon is creating a lot of small value to a lot of people by delivering goods next day. People on wall street are creating a lot of value for wealthy and powerful people. An engineer can automate a lot of value creation that was previously done by a large number of people, allowing companies to have a shot at making a lot of money, hence why they're paid more. Some of those powerful and wealthy people got rich by providing value, some of them got rich by exploiting the government's centralised power, its corruption and the possibility of stealing value from all the taxpayers. A scam is a crime on par with stealing or charging taxes. Stealing doesn't create value, it just transfer wealth.

Retric 5y ago
Value isn’t what people want. People want drinking water more than just about anything else, but that’s cheap to provide so the cost stays low. Gold on the other hand is rarely something people consider or want, but it’s rare therefore it has high material value.
- HPsquared 5y ago
  Value of everything, including money, is subjective and situational. For a "win-win" transaction (which is the case if everyone is free to choose) you need: (Value to buyer) > (value of sale price to buyer) And: (Value of Sale price to seller) > (Cost to the seller) If I buy a computer for $1000, the computer is worth more to me than the $1000. To the seller, the $1000 is worth more to them than the computer. Value has been created for both parties.
  - Retric 5y ago
    That’s extremely oversimplified and irrelevant to my point. Expectations of being able to pay less impacts what people are willing to pay for something. In a transaction, Value defined for the buyer based on the expectation of personal utility and a seller based on their expectation of the market and their personal utility. The actual cost and actual value to buyer are largely irrelevant. Basically, buyers lack complete information so they will make purchases where (Value to buyer) < (value of sale price to buyer) etc, and of course sellers have the same issue.
- leetcrew 5y ago
  the price of water isn't really subject to market forces though; it's usually provided by a regulated utility or directly by the government. based on the existence of lawns in arid places, I'd argue water is mispriced. in this particular case, it seems better than the alternative where poor people can't afford drinking water.
  - Retric 5y ago
    Water isn’t always provided by a regulated utility especially historically. It’s never been particularly expensive compared to gold, silver, etc.

dangerface 5y ago

> Is that the system we want? Perfect is the enemy of good, we wan't a system we can change and improve, communism failed because of the great stagnation the leaders in change had no interest in change or improving and the workers underneath them had no means to affect change. Worker parties offer the optics of democracy that the workers have a say in their work but in reality that didn't happen the workers worked for their boss or starved. Under capitalism you have the same options work or starve but you also get a third option, you can compete against your boss it was ultimately this competition that allowed capitalism to change and improve where communism stagnated. Does capitalism guarantee success 100% of the time? nope, but it does provide a mechanism to affect change from the bottom up, other systems don't do that.