4 ms·

> I've often wondered why 'the market' doesn't understand that if garbage men disappeared, my city would look like a hellscape in a week. I think that's a fund

by edanm 4y ago

> I've often wondered why 'the market' doesn't understand that if garbage men disappeared, my city would look like a hellscape in a week. I think that's a fundamental misunderstanding of the market. I didn't understand this either until I (self-) studied a bit of economics. The classic question in economics was this - why are diamonds more valuable than water? Without water you're dead. Without diamonds you're mostly no worse off. The answer to this led us eventually to the theory of supply and demand. Sure, without garbage workers, the city would be terrible. That's why we pay them. But the supply of garbage workers is apparently much larger than the supply of e.g. software engineers. If you have 100 people who can do one job, vs. person who can do the other job, that 1 person has a lot more leverage and you have to pay them more. Even if both jobs are equally important. That's how a market works. If your friend quit his team, he would presumably be easy to replace. If you quit your team, it would be harder. That is eventually reflected in your salaries. It's not perfect - since no one has perfect information, a lot of this stuff is based on guesswork and consensus. But you can very clearly see that the principles are correct. > My conclusion was that 'the market' isn't a fairly good proxy for actually providing a contribution but as with all things human, there's also politics involved. That's a fair conclusion, but I disagree with it. I think it's really true that one Einstein contributes more to the world (on average) than one garbage worker. One software engineer contributes more to the world (on average) than one garbage worker. And so on. It's mostly due to scale effects - one garbage worker can only do so much. One software engineer does a lot more because their work is easily duplicated and scaled and affects a lot more people.

ThalesX 4y ago
I've also self studied economy and am jaded with all the examples that go to the root of the economic theory while reality is oftentimes more complicated. Such as in the example with me working for a VC backed company, my friend working for the utility company and GPs consultant working for whoever pays the money. > The classic question in economics was this - why are diamonds more valuable than water? Without water you're dead. Without diamonds you're mostly no worse off. Would people pay more for diamonds if they were dying of thirst? People pay more for diamonds vs. water only if the water problem is already handled. The economy is such a complex model of every interaction that I find it disingenuous to base the assumption that market rate == usefulness on pure theory. > That's how a market works. If your friend quit his team, he would presumably be easy to replace. If you quit your team, it would be harder. That is eventually reflected in your salaries. In this particular circumstance, no. He's a lot harder to replace in terms of quality and knowledge than I am in my current team. We were lucky to get injected with millions of dollars of capital while he works for a utility company. He is useful for thousands of people. My lines of code have not been used by anyone yet and possibly will never be. > It's not perfect - since no one has perfect information, a lot of this stuff is based on guesswork and consensus. But you can very clearly see that the principles are correct. The principles are correct; is it possible that they are correct because they are fundamental, and not the actual reality where politics come into play? If we'd be designing for the real world like we study physics in high school (no friction, perfect spheres...) there'd be a lot of difference between the theory and practice. I'm not sure why people suggest economy is otherwise. > That's a fair conclusion, but I disagree with it. Likewise. We can agree to disagree. But taking politics aside, I am glad that at least on some level, one can find a software engineer in a poorly managed country making less than a garbageman in a well managed one. So, somewhere in the world there exists a garbageman that provides more value to society than a software engineer.
- edanm 4y ago
  > The economy is such a complex model of every interaction that I find it disingenuous to base the assumption that market rate == usefulness on pure theory. I agree, but I think this is also generally true. It really is true that a garbage worker is generally less valuable on a societal level than a software engineer (in terms of work output - they might be far more valuable for other things which are just as important!) > We were lucky to get injected with millions of dollars of capital while he works for a utility company. He is useful for thousands of people. My lines of code have not been used by anyone yet and possibly will never be. Look, that's true of a lot of software that gets written. There is a lot of waste. For sure if you look back and see that lots of code written was never used, that code in particular wasn't better for society than something more concrete. But I look at it like with science. Lots of scientists are conducting research that won't ever pan out, doing experiments that end up going nowhere, etc. Was that value-less for society? I don't think so. If we could know ahead of time what would work and what wouldn't, then of course that wouldn't be valuable. But throwing out 100 bad ideas and ending up with a lightbulb is still worth it for society, and the markets react as such. In your case - the reason VCs even have that money is because in the long run, given enough bets, they make money back, which for the most part translates into "they created enough value." Even if individual bets ended up not mattering. > The principles are correct; is it possible that they are correct because they are fundamental, and not the actual reality where politics come into play? Oh for sure there's a lot of distortions, both for good and ill. No argument there. I just think that for the most part things are correct and adhere to the economic theory, and outliers are relatively rare. As opposed to > I am glad that at least on some level, one can find a software engineer in a poorly managed country making less than a garbageman in a well managed one. So, somewhere in the world there exists a garbageman that provides more value to society than a software engineer. Ahah, funny but true. This btw is itself the result of regulations - if people were free to e.g. change countries as much as they wanted, fairly rapidly wage gaps like this would disappear, which would be good for the world IMO. At least economically speaking.
  - simonh 4y ago
    I think a lot of this is about perceived value. A gardner gets to see the products of their labour around them every day. A software developer at a bank might write lines of code and never even know when they are run, but those lines of code might, protect against a risk that would otherwise have brought down the company, or optimise investments for a pension fund that help generate additional tens of millions of dollars for people's pensions over the lifetime of the code. A lot of code makes only a tiny difference, but it can make that difference for millions of people over decades.
esperent 4y ago
> one Einstein contributes more to the world (on average) than one garbage worker And so does one Putin. Your point about scale is valid but the implied value judgement of choosing Einstein is not (whether you intended that or not, choosing Einstein ensures everyone will read it that way). One software developer or engineer working for a big nasty corporation like Shell or Facebook does create more change in the world than one garbage collector, undoubtedly. But it's fully possible for the change they create to be entirely negative. An engineer who creates a faster rainforest cutting machine, for example, or a better method of catching fish that results in destruction of an ecosystem, or a developer who writes ever more sneaky ways to invade your privacy. More change does not equal more value.
- zimpenfish 4y ago
  > But it's fully possible for the change they create to be entirely negative. cf the ur-example of Thomas Midgely Jr[1] who developed leaded gasoline (bad) and then went onto CFCs (bad). [1] https://en.wikipedia.org/wiki/Thomas_Midgley_Jr https://en.wikipedia.org/wiki/Thomas_Midgley_Jr.
- lazyasciiart 4y ago
  If money is a fair assessment of value, every single slave owner must have contributed more to the world than the entire population of slaves!!
  - kenjackson 4y ago
    Even the most cynical don’t consider non-capitalist systems like slavery something that models value.
    - pbhjpbhj 4y ago
      How is slavery non-Capitalist. I always thought it was the epitome of market capitalism as human life gets valued by the market?
      - 4y ago

by edanm 4y ago

ThalesX 4y ago

I've also self studied economy and am jaded with all the examples that go to the root of the economic theory while reality is oftentimes more complicated. Such as in the example with me working for a VC backed company, my friend working for the utility company and GPs consultant working for whoever pays the money. > The classic question in economics was this - why are diamonds more valuable than water? Without water you're dead. Without diamonds you're mostly no worse off. Would people pay more for diamonds if they were dying of thirst? People pay more for diamonds vs. water only if the water problem is already handled. The economy is such a complex model of every interaction that I find it disingenuous to base the assumption that market rate == usefulness on pure theory. > That's how a market works. If your friend quit his team, he would presumably be easy to replace. If you quit your team, it would be harder. That is eventually reflected in your salaries. In this particular circumstance, no. He's a lot harder to replace in terms of quality and knowledge than I am in my current team. We were lucky to get injected with millions of dollars of capital while he works for a utility company. He is useful for thousands of people. My lines of code have not been used by anyone yet and possibly will never be. > It's not perfect - since no one has perfect information, a lot of this stuff is based on guesswork and consensus. But you can very clearly see that the principles are correct. The principles are correct; is it possible that they are correct because they are fundamental, and not the actual reality where politics come into play? If we'd be designing for the real world like we study physics in high school (no friction, perfect spheres...) there'd be a lot of difference between the theory and practice. I'm not sure why people suggest economy is otherwise. > That's a fair conclusion, but I disagree with it. Likewise. We can agree to disagree. But taking politics aside, I am glad that at least on some level, one can find a software engineer in a poorly managed country making less than a garbageman in a well managed one. So, somewhere in the world there exists a garbageman that provides more value to society than a software engineer.

edanm 4y ago
> The economy is such a complex model of every interaction that I find it disingenuous to base the assumption that market rate == usefulness on pure theory. I agree, but I think this is also generally true. It really is true that a garbage worker is generally less valuable on a societal level than a software engineer (in terms of work output - they might be far more valuable for other things which are just as important!) > We were lucky to get injected with millions of dollars of capital while he works for a utility company. He is useful for thousands of people. My lines of code have not been used by anyone yet and possibly will never be. Look, that's true of a lot of software that gets written. There is a lot of waste. For sure if you look back and see that lots of code written was never used, that code in particular wasn't better for society than something more concrete. But I look at it like with science. Lots of scientists are conducting research that won't ever pan out, doing experiments that end up going nowhere, etc. Was that value-less for society? I don't think so. If we could know ahead of time what would work and what wouldn't, then of course that wouldn't be valuable. But throwing out 100 bad ideas and ending up with a lightbulb is still worth it for society, and the markets react as such. In your case - the reason VCs even have that money is because in the long run, given enough bets, they make money back, which for the most part translates into "they created enough value." Even if individual bets ended up not mattering. > The principles are correct; is it possible that they are correct because they are fundamental, and not the actual reality where politics come into play? Oh for sure there's a lot of distortions, both for good and ill. No argument there. I just think that for the most part things are correct and adhere to the economic theory, and outliers are relatively rare. As opposed to > I am glad that at least on some level, one can find a software engineer in a poorly managed country making less than a garbageman in a well managed one. So, somewhere in the world there exists a garbageman that provides more value to society than a software engineer. Ahah, funny but true. This btw is itself the result of regulations - if people were free to e.g. change countries as much as they wanted, fairly rapidly wage gaps like this would disappear, which would be good for the world IMO. At least economically speaking.
- simonh 4y ago
  I think a lot of this is about perceived value. A gardner gets to see the products of their labour around them every day. A software developer at a bank might write lines of code and never even know when they are run, but those lines of code might, protect against a risk that would otherwise have brought down the company, or optimise investments for a pension fund that help generate additional tens of millions of dollars for people's pensions over the lifetime of the code. A lot of code makes only a tiny difference, but it can make that difference for millions of people over decades.

esperent 4y ago

> one Einstein contributes more to the world (on average) than one garbage worker And so does one Putin. Your point about scale is valid but the implied value judgement of choosing Einstein is not (whether you intended that or not, choosing Einstein ensures everyone will read it that way). One software developer or engineer working for a big nasty corporation like Shell or Facebook does create more change in the world than one garbage collector, undoubtedly. But it's fully possible for the change they create to be entirely negative. An engineer who creates a faster rainforest cutting machine, for example, or a better method of catching fish that results in destruction of an ecosystem, or a developer who writes ever more sneaky ways to invade your privacy. More change does not equal more value.

zimpenfish 4y ago
> But it's fully possible for the change they create to be entirely negative. cf the ur-example of Thomas Midgely Jr[1] who developed leaded gasoline (bad) and then went onto CFCs (bad). [1] https://en.wikipedia.org/wiki/Thomas_Midgley_Jr https://en.wikipedia.org/wiki/Thomas_Midgley_Jr.
lazyasciiart 4y ago
If money is a fair assessment of value, every single slave owner must have contributed more to the world than the entire population of slaves!!
- kenjackson 4y ago
  Even the most cynical don’t consider non-capitalist systems like slavery something that models value.
  - pbhjpbhj 4y ago
    How is slavery non-Capitalist. I always thought it was the epitome of market capitalism as human life gets valued by the market?
    - 4y ago