Lumifer comments on Things I Wish They'd Taught Me When I Was Younger: Why Money Is Awesome - Less Wrong

32 Post author: ChrisHallquist 16 January 2014 07:27AM

You are viewing a comment permalink. View the original post to see all comments and the full post content.

Article Navigation

Comments (234)

CC Licenced

Comments (234)

Sort By: Best

Show:

You are viewing a single comment's thread. Show more comments above.

Comment author: Lumifer 16 January 2014 04:33:27PM 4 points [-]

we should also be talking about how to make sure that people who aren't like us actually get some of it.

"Some" of it they generally do. But if you're going for equality, do note that people are usually paid for the value they produce and that individuals' capability to produce value differs GREATLY. Even if you control for things like socio-economic status.

Comment author: [deleted] 16 January 2014 05:22:33PM * 1 point [-]

I half-agree. I'm actually starting to believe that factors like trade, industrial policy, and public regulation of economic rents and public goods (take the preceding concepts apolitically, for the moment, please) have more to do with our current economic crises than any notion of individual "merit". That's not to say there's no such thing, merely that in particular, policies regarding trade, industry, and economic rent seem like much stiffer variables than the relatively loose factors of individual work-ethic or education, or even things like national work-hours.

For instance, a country that exports large amounts of capital-intensive goods while strongly regulating its financial sector (say, current day Australia or Germany) seems to be able to afford uneducated individuals, expensive social programs, or short work hours much more easily than a country that theoretically has higher per-hour productivity but suffers a trade deficit and has largely financialized its economy (say, current day America or the UK).

What we end up with is that America and the UK suffer massive income inequality, while Australia and Germany are more equal and stable -- even though they're all First World countries with their own top-level educational institutions, labor expertise, and companies. A theory which treats macroeconomic policy as a stiffer (more strongly predictive) variable than individual/company-level merit therefore seems more likely.

Comment author: Lumifer 16 January 2014 05:46:44PM 1 point [-]

I'm actually starting to believe that factors like trade, industrial policy, and public regulation of economic rents and public goods ... have more to do with our current economic crises than any notion of individual "merit".

I don't understand what do you mean -- I can't see any connection between "individual merit" (and by "merit" do you mean the productive value of a person?) and current economic crises.

seems to be able to afford uneducated individuals, expensive social programs, or short work hours much more easily

I don't understand that either. It's not that, say, Germany can afford a more generous welfare system than the US -- after all per-capita GDP is higher in US than in Germany -- it's just that Germany chooses to reallocate more of the wealth produced in this way.

while Australia and Germany are more equal and stable

Equality isn't a good yardstick -- the old USSR had much more equality than any Western country. And I don't see the stability you're talking about. Stable in which sense?

Comment author: Creutzer 22 January 2014 10:54:18PM * 0 points [-]

individuals' capability to produce value differs GREATLY. Even if you control for things like socio-economic status.

Some might say that exactly that is the problem. (Not necessarily myself.)

Comment author: Lumifer 23 January 2014 12:46:15AM 1 point [-]

Some might say that exactly that is the problem.

To these people I would point out the difference between reality and various imaginary universes one can construct.

Comment author: Creutzer 23 January 2014 07:36:08AM 0 points [-]

Is that a new version of the is-ought fallacy?

Comment author: Lumifer 23 January 2014 03:54:13PM 1 point [-]

Kinda. It's really more of a confusion between what the world is and what you would like it to be.

Comment author: TheAncientGeek comment score below threshold [+] (15 children)

Comment author: Lumifer 23 January 2014 03:55:14PM 4 points [-]

Individuals are usually paid according to the laws of supply and demand. Value has little to do with it.

You don't think that the 'demand' part has anything to do with value? That's a novel idea.

Comment author: Desrtopa 24 January 2014 03:25:54PM 1 point [-]

Eh, probably not what he had in mind, but it's certainly possible to make money doing things which have negative net value. You just have to do something which some people want enough to pay you for, and other people really want you not to do. As long as the people who want you not to do it can't prevent you from doing business, you can make money dealing with the people who want you to do it, even if the negative value to the people who want your business to stop is greater than the positive value of the people who want it to continue.

To use an example which was already on my mind, suppose that the people playing drums in the New York subway system (of whom there are many) mostly irritate rather than entertain people. Say that a tenth of the crowd is willing to pay them for their music, four tenths are indifferent, and the other half of the crowd would rather pay them to stop. But the people who want the noise to go away can't pay them to stop, because even if they could cooperate with each other in order to provide a greater incentive than the people who're willing to pay for music, it would just encourage people to blackmail them by showing up and getting paid to not play music.

When a business has both negative and positive demand from different people, it generally takes much more difficult coordination for the people with negative demand to influence the business than positive demand, so the two often do not cancel properly.

Comment author: Lumifer 24 January 2014 03:43:46PM 1 point [-]

it's certainly possible to make money doing things which have negative net value.

Negative net value aggregated over a sufficiently large number of people, e.g. the whole humanity? Sure, it's easy and very widespread. Basically you're talking about anything with a large enough negative externality. A favorite theme of environmentalists, by the way.

Comment author: TheAncientGeek 23 January 2014 05:07:16PM * 0 points [-]

Haven't the examples I have given covered that? There can be moderate demand for high-value givers and moderate demand for no-value givers. Also, value doesn't tell you much about supply.

Comment author: blacktrance 23 January 2014 05:19:11PM 3 points [-]

What does "value" mean if it's not what's determined by demand?

Comment author: TheAncientGeek 23 January 2014 05:50:25PM 0 points [-]

In the employment market, demand is whatever someone is willing to pay for, howver mistaken they are about what they are getting for their money.

Comment author: Lumifer 23 January 2014 06:01:35PM 2 points [-]

People who are consistently mistaken about what they are getting for their money tend to lose over time if not their willingness then their ability to pay.

Comment author: Lumifer 23 January 2014 05:17:12PM * 1 point [-]

Haven't the examples I have given covered that?

No, they have not. I agree that, of course, supply and demand matter. What I don't agree with is your claim that "Value has little to do with it". Not to mention that "financiers" not producing "anything noticeable" isn't really relevant to anything.

If you want to find examples of situations where people's income is not dependent on the value they provide, the easiest direction to look is direct power, for example government power.

Comment author: hairyfigment 23 January 2014 06:13:26PM -1 points [-]

Surely the easiest would be to look at someone with measurable economic value that happens to be negative.

Also, if TheAncientGeek is a pure though concealed troll - as another recent comment would in fact suggest - then people should stop responding and just downvote.

Comment author: Lumifer 23 January 2014 06:27:59PM * 1 point [-]

Also, if TheAncientGeek is a pure though concealed troll - as another recent comment would in fact suggest - then people should stop responding and just downvote.

I don't have an opinion on whether TheAncientGeek is a troll, but speaking generally, outed trolls are pretty harmless and can be countertrolled for fun.

Comment author: gjm 23 January 2014 10:27:27PM -1 points [-]

Demand has to do with value to whoever's paying. This can be very different from value to society overall. If a doctor saves your life then (aside from the effort and cost of doing it) that's a substantial gain to the world as a whole. If a hedge fund manager in charge of your money makes you $10M richer without adding anything to the overall size of the economy, then the value to you may be comparable to that of saving your life (kinda) but the value to the world is rather close to zero.

Value to employers is surely correlated somewhat with value to society, but they're far from the same.

Comment author: Lumifer 24 January 2014 02:11:00AM 1 point [-]

Demand has to do with value to whoever's paying. This can be very different from value to society overall.

I don't think I understand your point. Society is perfectly capable of paying for the "value to society overall", theoretically that's what the government budget is for.

Yes, sure, I can imagine the creation of some value that's so widely distributed in so tiny pieces that no single entity wants to pay for it, but so what?

Comment author: gjm 24 January 2014 08:40:50PM 0 points [-]

so what?

I may have misunderstood the thrust of your argument (beginning "if you're going for equality, do note...") but it looks to me as if at least part of what you're saying is that much of the inequality we presently see is just and right and good, because what's happening is that people are being rewarded in proportion to the value they create. (Which might be just and right and good (1) because that means people are getting what they deserve, and/or (2) because it's a good thing for there to be strong incentives to create value.)

I agree that there's a lot to be said for inequality proportional to created value. But if, as seems to me to be the case (and as I think TheAncientGeek was arguing, albeit somewhat trollishly), (a) people get rewarded not for actual value created but for value delivered to the people who pay them, and (b) these two can (and often do) diverge sharply -- well, then, I think the argument becomes very much weaker: the existing inequality is less in accordance with actual good done, and less something that we want to incentivize more of.

Now, we should still expect some correlation between value to society and value to employers. And, indeed, society is capable of paying for value-to-society, and that that's something governments can and should and sometimes do do. But if you look around at who gets paid most and who least, I have to say the correlation between value created and reward received seems to me ... not that great.

I accordingly suggest giving this particular argument against trying to reduce inequality less weight than one might otherwise be inclined to give it. (Still some, for sure, and in particular this still seems like a decent argument against outright communism. But, e.g., Scandinavia seems to be doing well enough to suggest that having somewhat less inequality than eli_sennesh encounters in California might work just fine.)

Incidentally, if whoever downvoted my earlier comment (whether Lumifer or someone else) would like to explain why they found it worthy of downvoting rather than (only?) counterargument, I'd be interested and grateful.

Comment author: Lumifer 24 January 2014 08:53:14PM 2 points [-]

much of the inequality we presently see is just and right and good, because what's happening is that people are being rewarded in proportion to the value they create.

My position is weaker: I don't make claims about what is "right and good". It's really an observation that different abilities of people to create value will "naturally" lead to inequality unless someone (like a government) takes explicit active measures to counteract this.

people get rewarded not for actual value created but for value delivered to the people who pay them

I don't know what "actual value" is. I treat value as subjective -- different people can and do assign different value to the same thing. For the same reason I find "value to society" a suspect concept.

whoever downvoted my earlier comment (whether Lumifer or someone else)

I generally don't up- or down-vote comments in threads in which I participate. Specifically, I didn't vote on any comments in this thread.

Comment author: gjm 24 January 2014 10:04:08PM 0 points [-]

It's really an observation that different abilities [...] will "naturally" lead to inequality

Then yes, I agree with that.

I treat value as subjective

Me too. What I wrote should be regarded as shorthand for something like this: "net value to society, which of course different people will assess in different ways; I have mine, Eli has his, Lumifer has his or hers, etc. I expect these different assessments to be similar enough that it isn't worth filling this discussion with metaethical digressions about how different people have different values". Perhaps there's some way I could have put it that wouldn't have given the impression I was talking about magical Objective Real Moral Value without filling the thread with metaethical digressions, but I didn't happen to spot one :-).

For the same reason I find "value to society" a suspect concept.

I'm not sure I understand this. It looks to me as if the following two questions are basically independent: (1) Is there one true way of assessing value, that isn't dependent on any particular valuer's values? (2) Is there, for typical ways of assessing value, a meaningful way to aggregate costs and benefits to lots of different people into an overall "value to society"? I answer "almost certainly no" to #1 but "yes, at least roughly" to #2.

I generally don't up- or down-vote comments in threads in which I participate.

Useful to know. (Neither do I, FWIW.)

Comment author: coffeespoons 22 January 2014 10:40:50PM * 0 points [-]

do note that people are usually paid for the value they produce and that individuals' capability to produce value differs GREATLY

That's true, but I still care about people who don't produce much value, and I don't like to see them being impoverished and miserable.

Comment author: Lumifer 23 January 2014 12:45:02AM 2 points [-]

I still care about people who don't produce much value

Sure. Nobody says you have to not care about less productive people.

I don't like to see them being impoverished and miserable.

So redistribute some of your value to them.

Comment author: jpaulson comment score below threshold [+] (4 children)

Lumifer comments on Things I Wish They'd Taught Me When I Was Younger: Why Money Is Awesome - Less Wrong

Article Navigation

Comments (234)

Nearest Meetups

Virtual Study Room

Recent Comments

Recent Posts

Recent Rationality Quotes

Recent Wiki Edits

Top Contributors, 30 Days

Recent Karma Awards

Comments (234)

Top Contributors, 30 Days

You'll need to login or register to do that

(Don't worry, it only takes a few seconds)

Create

Login