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JonahSinick comments on How much was creating Google worth? - Less Wrong
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Working at Google diverted these people's skilled labor from other worthwhile endeavors. I agree that these people being involved contributed by choosing Google as opposed to choosing something else. But I don't think that the effect size is very large. Google's market cap is about 200 billion, which is only 5x Larry Page and Sergey Brin's wealth. Much of this valuation comes from Google having a dominant position rather than from Google's contribution relative to the counterfactual. I would be interested in making an adjustment to account for the issue that you mention, but I doubt that it would be greater than 2x.
Huh? If someone writes a software program worth $100,000, then they have contributed $100,000 to the economy. If the person could have written a program worth $80,000, that doesn't mean that the person has only contributed $20,000 to the economy. Your comment makes sense if evaluating the value of Google to the economy, but not when evaluating the value of the employees to Google or the economy.
Ok, so I intended to ask the question "How much value did Brin and Page create by founding Google?" rather than the question "How much value did the early Google staff collectively create in contributing to Google's growth?" When I get a chance, I'll edit the post to this effect.
Don't mistake Google's market cap for the value people have gotten out of Google. Shareholders only get a fraction of the value delivered by their companies.
Sometimes, that "fraction" is greater than 1 (not that I'm saying that it is in the case of Google). Rent seeking, regulatory capture, arbitrage, and tournament theory are all cases where people make more money than their contribution to the economy.
Indeed, this was the premise of my post :-). I was using the ratio of the founders' earnings to market cap as a proxy for the ratio of social value produced by the founders to social value produced by Google.