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Absolutely not. For a country most labor doesn't compound in value. When a farmer produces wheat the value created is equal to the value of the wheat. When a b
by gizmo 3y ago
Absolutely not. For a country most labor doesn't compound in value.
When a farmer produces wheat the value created is equal to the value of the wheat. When a barber cuts somebodies hair the value created is again more or less equal to the price charged. A barber shop doesn't make anything that accumulates in value. This is true for most the economy. It trades at about 1x revenue.
Tech is different. Write software once, sell it many times. Design a chip once, sell millions of copies. Tech companies are the outliers. The rest of the world doesn't work like this.
- rich_sasha 3y agoI don't think this analogy works. What the farmer would sell his farm for ("market cap") is much more than an annual harvest value ("revenue"). Also tech is not that special. You could say the same about a factory, which you build once and it churns out cars, or a mine which churns out minerals. And to the extent this is not true, for example factories needing upgrades and labour, the same is true of tech. Software gets old, needs support, and the labour of well paid technologists.