Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Wealth: The Toxic Byproduct (2013)

meltingasphalt.com

Post reply on HN
Print view View original

51–60 of 149 posts

Re: Wealth: The Toxic Byproduct (2013)

#51

Post by notahacker »

theptip wrote: post #25

> Wherever the money came from, if you dump it through the window, you'll be helping a few people, but at the same time causing inflation that will hurt everyone else. On first read I thought that this was incorrect, but on pondering a bit more, I think it's sound -- the observation is that in effect you're creating new Congolese money, and you've not actually produced any value to add into the economy, you've just i…

You might not have produced anything, but you have given somebody else that produced something a reward, so now they can start making new things and buy new material right away. Also, they know there's a wealthy foreigner that keeps handing out Congoese Francs, so there's more incentive to do so. Where the additional money is spent it'll tend to drive up prices; where it's invested in additional production it won't.

In practice, on a national level it's unlikely any individual is going to drive up the general price level because the actual quantity of currency in circulation is driven by the banking system (which ha policies specifically designed to keep the supply and demand for money in balance). And an tourist handing out currency willy nilly is going to have a big impact on prices in a small village regardless of what currency they pay in, because there's not much choice or competition there.

In terms of theory, the basic intuition is described by the Quantity Theory of Money and the reasons why prices/wages tend to rise slower than wages is covered by (New) Keynesian economics; covering when, how and why the extra spend might lead to more growth or more inflation is pretty much the entire first year of undergrad macroeconomics (particularly with the USD added in as well; that introduces the dynamic of how a fall in the value of the Congoese Franc affects imports and exports and resulting effects on local production)

Re: Wealth: The Toxic Byproduct (2013)

#52

Post by munificent »

theptip wrote: post #25

> Wherever the money came from, if you dump it through the window, you'll be helping a few people, but at the same time causing inflation that will hurt everyone else. On first read I thought that this was incorrect, but on pondering a bit more, I think it's sound -- the observation is that in effect you're creating new Congolese money, and you've not actually produced any value to add into the economy, you've just i…

> On first read I thought that this was incorrect, but on pondering a bit more, I think it's sound -- the observation is that in effect you're creating new Congolese money, and you've not actually produced any value to add into the economy, you've just increased the numerator in the equation.

This depends entirely on how you distribute the money. If you give each Congolese person an amount of money scaled by how much they currently have then, yes, you're just changing the currency scale uniformly and no one's relative wealth is affected.

But if you give everyone a fixed amount of money, then even though the total value of the Congolese economy is the same, you have reduced economic disparity between its members.

Re: Wealth: The Toxic Byproduct (2013)

#53

Post by mcfunk »

The framing of this is all wrong. The problem isn't that developers are overpaid, it's that other industries' laborers have had their work systematically undervalued, all the way down to people performing essential services who can't afford to feed their families on full-time work.

However you want to argue about payment/wealth being a problem, ultimately, the idea that workers being compensated "too much" (when definitionally they aren't making as much as their labor's value creates) is the productive thing to focus on is very unhelpful.

Re: Wealth: The Toxic Byproduct (2013)

#54

Post by b0bby_tabl3s »

ChuckMcM wrote: post #35
nostrademons wrote: post #9

It's interesting to speculate on what would happen if some of these foundational assumptions of economics didn't hold. What if money actually became more valued than what you can buy with money ? What if supply didn't create its own demand? What if people didn't try to make money to satisfy their own wants, but to one-up their neighbors in the pissing match of life? You'd see a lot of strange behavior. Instead of con…

I'm not sure I would use the word "interesting" it is more likely "illuminating" :-) But word selection aside, one of the problems that money brings is that it is a concrete number, and thus susceptible to being coerced into being a "score." This is particularly true when you have people who are insecure about their value, they might get it into their heads that the person with the highest "score" has the highest val…

Wealthy people understand how money 'works'. It never has a 'concrete number' ;-)

Re: Wealth: The Toxic Byproduct (2013)

#55

Post by noahth »

> Suppose a genie offers to tweak the world in one of two ways. Either he will (A) double everyone's bank account, or (B) double the amount of food in existence. Which is better for society? Clearly the answer is B, doubling the food. Option A (doubling the money) merely creates more placeholders, more tokens — while option B creates more objects of intrinsic value. In other words, A is a zero-sum change, while B is positive-sum.

This thought experiment is mistaken in almost every direction -- first of all it's not zero-sum to double every bank account given the unequal distribution of account balances. Second, and even worse for the point being made, it's wildly untrue to imagine that food is in such short supply that we need to double it. The problem with food is primarily one of distribution! This is where I gave up attempting to see his argument through. There's nothing to be gained by "reasoning" from such poor premises.

Re: Wealth: The Toxic Byproduct (2013)

#56

Post by nostrademons »

tristor wrote: post #6

This article is an interesting thought experiment, but I can't help but feel that the statements made are in such opposition to understood economic principle and call into question basic moral precepts. That doesn't mean it's wrong, it just feels alien to read. As an example of what I mean, the idea of consumption being a net-negative destructive action goes against the economic concept of velocity of money and how t…

Economics is supposed to be value-neutral: it describes the world as it exists, and doesn't attempt to pass judgment on whether any of the behaviors it describes are good or bad. There's a whole level of punditry and policy-making on top of economics that takes these concepts and says "Ok, we want full employment and equitable distribution of wealth and minimal dead-weight loss" and then tries to tweak the appropriate levers to get that, but the field of economics itself is concerned with figuring out what the levers are.

The economist isn't really concerned with whether consumption is good or bad, but takes it as a given that people want to consume. When the hypothetical protagonist in the story buys himself a yacht, he's satisfying his own desires by redirecting the productive efforts of many Kongolese towards his own end. You can layer a value system on top of this, and argue either that it's immoral for one person to be able to direct the energies of thousands of other people for his personal efforts, or argue that it's moral because he previously delivered more value to the Kongolese through his grain speculation than he is consuming through the building of his yacht. But those moral judgments are separate from the fact that under the monetary system in this thought experiment, he has both the ability and incentive to direct resources in this manner.

Re: Wealth: The Toxic Byproduct (2013)

#57

Post by tristor »

illumin8 wrote: post #47
tristor wrote: post #6

This article is an interesting thought experiment, but I can't help but feel that the statements made are in such opposition to understood economic principle and call into question basic moral precepts. That doesn't mean it's wrong, it just feels alien to read. As an example of what I mean, the idea of consumption being a net-negative destructive action goes against the economic concept of velocity of money and how t…

I agree. I was in agreement with the article when it says that money we earn is a statement of the value we provide to society, so earning money is good, however, I don't agree with the statement that spending money and consumption is bad. The example of the yacht is rather contrived as well. They talk about how all of the craftsmen and lumber workers had to chop down, dry, age, cut and polish the wood to make the ya…

> If there was nobody willing to consume or buy products, how would anyone make income?

I don't know what the author's intention was, but my assumption when I read that was their economic world view is one in which people should focus inwardly, striving for sustainability over specialization. It's conceivable to have economic exchange without luxury goods, because that labor can instead be directed into other activities.

That said, I had many of the same questions myself. I think specialization in society has been historically important to the betterment of humanity in many ways. As has the ability of markets to enable businesses to invest labor ahead of sales, so whether or not someone purchases something (with the exception of custom projects like a yacht) rarely has any impact on whether or not it will actually be made. Just ask Atari.

Re: Wealth: The Toxic Byproduct (2013)

#59

Post by cleandreams »

mcfunk wrote: post #53

The framing of this is all wrong. The problem isn't that developers are overpaid, it's that other industries' laborers have had their work systematically undervalued, all the way down to people performing essential services who can't afford to feed their families on full-time work. However you want to argue about payment/wealth being a problem, ultimately, the idea that workers being compensated "too much" (when defi…

This is true. The problem is that most jobs have had stagnant wages for decades and developers are an exception. That is where the guilt comes from. But we need income growth like we need other kinds of growth. The transition to carbon free economy is going to be expensive. It's not going to happen if we decide income growth is toxic.

Re: Wealth: The Toxic Byproduct (2013)

#60

Post by awkward »

Suppose you ruin the Congolese economy - bright young men and women who would have become doctors and engineers become grain farmers to get in on the magic window money train. A landlord who owns a building with a magic window on it becomes rich, runs for office, and implements disastrous social policy.

The point isn't that trade is actually bad, the point is that you've become an actor, moral or not, in the congolese economy. The attempt to find a single number that makes you good, and not bad, is simply Calvinism minus the theology. You can find out how good you for the world around your accounting statement as effectively as Anubis could find out by putting your heart on a scale.

Post reply on HN