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Rarely is value created or destroyed. It's transferred, as it is here. There are a few big exceptions to this. Discovering a new deposit of mineral wealth and
by lenerdenator 2y ago
Rarely is value created or destroyed. It's transferred, as it is here.
There are a few big exceptions to this. Discovering a new deposit of mineral wealth and the microcomputer revolution drastically speeding up business tasks are examples.
- alexey-salmin 2y agoThat's like exactly the opposite of how economy works. Taking a great firm and reducing it to zero destroys value. Building a great firm from zero creates it. I personally believe that the failure to understand this is the reason why the political left is so bad at building economies when given a chance. Being obsessed with the fair distribution of value, they overlook the creation and preservation aspect. In the end there's nothing to distribute.
- acchow 2y agoBarring rent seeking and other anti-competitive behavior, all net profit is value creation.
- s1artibartfast 2y agoEven rent seeking is value creation, just less than alternatives. No free exchange ever occurs unless the counterparties disagree on value, leading to a net gain post transaction.
- positr0n 2y agoThe definition of rent seeking is manipulating the political environment to create new wealth for yourself without creating net wealth for society. The classic example is the owner of a section of river imposing a toll for boats traversing the river. The rent creates value for the owner but exactly the same amount negative value for the rest of society. A toll for a ferry the owner created would be creating wealth. As would developing a resort there. Modern examples of rent seeking are usually related to regulatory capture or housing politics.