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I, and many economists, would argue that the price signal, profit and "serving society" are more tightly interwound than many like Hideyuki are mislead to belie

I, and many economists, would argue that the price signal, profit and "serving society" are more tightly interwound than many like Hideyuki are mislead to believe.

kizunajp 3y ago
Is there anything I can read to understand this better? Naively, I would think making a profit is not strictly necessary to serve society as long as the business makes as much money as it pays out?
- modernpink 3y ago
  My favourite explanation comes from Hayek [1]. Profit is a signal for other economic actors to move into the market to provide more goods and services. If something is profitable it means people (society) sees value in it so it is right that we would want more of it to be produced. If we say no to profit, it means we extinguish a mechanism by which society can allocate resources. On top of this, it's impossible for resource allocation for most goods and services to be organised top-down. Knowledge about wants, desires, propensity to manufacture and supply is dispersed and distributed among billions of people (and always in flux). [1] https://www.youtube.com/watch?v=PoTVSsxiwGc https://www.youtube.com/watch?v=PoTVSsxiwGc
  - bombcar 3y ago
    You have to combine it with the rent-seeking present in rental buildings; the rents will expand to drive out all but the most profitable businesses, which can be detrimental.
    - Der_Einzige 3y ago
      Hence why the LVT and Georgism need to be revisited. Even economists agree that a LVT is the only kind of tax that in theory stimulates the economy.
      - bombcar 3y ago
        Both those encourage “best and highest use” as the real estate term goes, but that is not necessarily what we want to encourage in every case. Of course never allowing and redevelopment has its own problems, but the solution is probably somewhere in the middle.
  - TFYS 3y ago
    While I'm sure Hayek was correct in his time, I wonder if it would now be possible to construct a better way to allocate resources than the price mechanism. Every person now has a device in their pocket with which to instantly communicate their needs, and we have the computing power to calculate at a scale that was unimaginable to Hayek. The price mechanism seems like a slow way to transfer information, and produces (possibly unwanted) side effects like wealth concentration.
    - deleted 3y ago
      [deleted]
  - anigbrowl 3y ago
    If we say no to profit, it means we extinguish a mechanism by which society can allocate resources. That's fine, we have others. Efficiency is overrated because it leads to excess concentrations of capital, an economic diabetes if you will. Knowledge about wants, desires, propensity to manufacture and supply is dispersed and distributed among billions of people (and always in flux). Amazon, Walmart etc. demonstrate this to be wrong in many respects; in any case nobody was arguing for central planning, so it's irrelevant.
- wahnfrieden 3y ago
  Try Graeber/Wengrow
ehnto 3y ago
You and many economists should probably go to a community centre, or join a hobby group then. Some things don't exist not because they aren't needed, but because the community that needs them can't afford it. As a general rule obviously I agree, but there are clear exceptions all around us.
- cousin_it 3y ago
  I think focusing on money misses the point a bit. You can think about "fuzzies" instead, for example if you start a hobby group and people attend, you're bringing value. But if nobody attends, or you run a shop and nobody even walks in, wouldn't you start to suspect that you aren't bringing much value? Also, people get set in their ways. You should be wary of thinking that you bring value, when you're just following habit. It's quite a trap, especially as you get older. Reevaluate from time to time.
  - ehnto 3y ago
    I don't see anything wrong with someone enjoying running a store continuing to do so, even if for few people. We can't value optimize everything, and some things have negative economic value but positive societal value. I agree we should all re-evaluate from time to time, but if it's all you know and you just want to run out the clock before retiring so be it.
guardiangod 3y ago
That just means money is not a valid measure of profit for him. There are other forms of profit as well.
JoeAltmaier 3y ago
As Spider Robinson observed in a Callahan story, if you have another column in your life spreadsheet labelled 'satisfaction' then it all adds up.
deleted 3y ago
[deleted]

I, and many economists, would argue that the price signal, profit and "serving society" are more tightly interwound than many like Hideyuki are mislead to believe.

kizunajp 3y ago

Is there anything I can read to understand this better? Naively, I would think making a profit is not strictly necessary to serve society as long as the business makes as much money as it pays out?

modernpink 3y ago
My favourite explanation comes from Hayek [1]. Profit is a signal for other economic actors to move into the market to provide more goods and services. If something is profitable it means people (society) sees value in it so it is right that we would want more of it to be produced. If we say no to profit, it means we extinguish a mechanism by which society can allocate resources. On top of this, it's impossible for resource allocation for most goods and services to be organised top-down. Knowledge about wants, desires, propensity to manufacture and supply is dispersed and distributed among billions of people (and always in flux). [1] https://www.youtube.com/watch?v=PoTVSsxiwGc https://www.youtube.com/watch?v=PoTVSsxiwGc
- bombcar 3y ago
  You have to combine it with the rent-seeking present in rental buildings; the rents will expand to drive out all but the most profitable businesses, which can be detrimental.
  - Der_Einzige 3y ago
    Hence why the LVT and Georgism need to be revisited. Even economists agree that a LVT is the only kind of tax that in theory stimulates the economy.
    - bombcar 3y ago
      Both those encourage “best and highest use” as the real estate term goes, but that is not necessarily what we want to encourage in every case. Of course never allowing and redevelopment has its own problems, but the solution is probably somewhere in the middle.
- TFYS 3y ago
  While I'm sure Hayek was correct in his time, I wonder if it would now be possible to construct a better way to allocate resources than the price mechanism. Every person now has a device in their pocket with which to instantly communicate their needs, and we have the computing power to calculate at a scale that was unimaginable to Hayek. The price mechanism seems like a slow way to transfer information, and produces (possibly unwanted) side effects like wealth concentration.
  - deleted 3y ago
    [deleted]
- anigbrowl 3y ago
  If we say no to profit, it means we extinguish a mechanism by which society can allocate resources. That's fine, we have others. Efficiency is overrated because it leads to excess concentrations of capital, an economic diabetes if you will. Knowledge about wants, desires, propensity to manufacture and supply is dispersed and distributed among billions of people (and always in flux). Amazon, Walmart etc. demonstrate this to be wrong in many respects; in any case nobody was arguing for central planning, so it's irrelevant.
wahnfrieden 3y ago
Try Graeber/Wengrow

ehnto 3y ago

You and many economists should probably go to a community centre, or join a hobby group then. Some things don't exist not because they aren't needed, but because the community that needs them can't afford it. As a general rule obviously I agree, but there are clear exceptions all around us.

cousin_it 3y ago
I think focusing on money misses the point a bit. You can think about "fuzzies" instead, for example if you start a hobby group and people attend, you're bringing value. But if nobody attends, or you run a shop and nobody even walks in, wouldn't you start to suspect that you aren't bringing much value? Also, people get set in their ways. You should be wary of thinking that you bring value, when you're just following habit. It's quite a trap, especially as you get older. Reevaluate from time to time.
- ehnto 3y ago
  I don't see anything wrong with someone enjoying running a store continuing to do so, even if for few people. We can't value optimize everything, and some things have negative economic value but positive societal value. I agree we should all re-evaluate from time to time, but if it's all you know and you just want to run out the clock before retiring so be it.

guardiangod 3y ago

That just means money is not a valid measure of profit for him. There are other forms of profit as well.

JoeAltmaier 3y ago

As Spider Robinson observed in a Callahan story, if you have another column in your life spreadsheet labelled 'satisfaction' then it all adds up.

deleted 3y ago

[deleted]