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Comment by duncanr | Hacker News Reader

The kids in the post add value by building more complex structures out of the raw materials, no? Does the author of the article think we have an infinite supply of raw materials? I read the original article as an experiment into control of raw materials rather than an experiment of added value vs. zero-sum.

As much as economists may dislike it, these arguments seem to always boil down to 'who has control of the raw materials'; those that are empowered are happy with the current system, and those that are not empowered are not. The efficiencies of the market, and whether it's zero-sum or not, would seem to be a secondary concern for most participants.

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Raw materials are less limited than most people think. The usual scenario is that as a raw material gets scarcer, the price for it goes up. With the price higher, firms are incentivized to spend more on technology to reach formerly unreachable raw resources, etc. This is why we've been running out of oil for about 100 years - the price goes up, technology is deployed, etc. And if we really did start to run out of oil, then the value of energy would go up creating demand for alternates as the price now pays for greater technological breakthroughs, etc.

So, to make a long story short, the idea that resources are a zero-sum game is also incorrect in the sense that the underlying value can be found given enough ingenuity unleashed with the profit motive.

So the lego example is in no way a reflection of the real world, and if I could give this blog post a larger up vote, I would.

This is why resource reserves are usually accompanied by a price per unit:

http://www.euronuclear.org/info/encyclopedia/u/uranium-reser...

The global uranium reserves with mining costs up to US $ 80 per kilogram amount to about 2 million tonnes ... If mining costs of up to 130 $/kg are taken into consideration the global uranium reserves are increased by further 3 million tonnes.

At some price, it will become possible to extract trace uranium from ocean water, of which there is quite a bit.

Would you be happier to say that the utilisation of raw materials 'tends towards' a zero-sum game, then? ;-)

I don't disagree with what you say (although I would argue the likelihood of this theory playing out in practice and over the long term seems low), however this is largely irrelevant to my original point which was that many people who aren't successful (by some measure) will complain that inequities 'in the system' are unfair, and much discussion will ensue because of that.

"The kids in the post add value by building more complex structures out of the raw materials, no?"

The problem with using that as a refutation is that in the market of the classroom, the lego houses are "durable capital goods". The 'right' way for the teachers to shake up the classroom is to highlight the value of other toy markets. For instance: you can create far more diverse objects with play-doh than you can with legos - in some instances, that might make play-doh more valuable.

Helping the kids understand that makes a conversation like, "I'll trade you 1/3 of my green play-doh for your lego car," possible. It also would not only -empower- the other students, it would begin teaching the kids valuable lessons in determining value and how to negotiate. Skills and insights that are far more valuable than learning how to say, "But you should give x to me because you have more."

Excellent point. This is an excellent lead-in to teach kids that the value they place on things is not intrinsic. Once they start thinking this way, they will discover that by changing the value they assign to things, they can manipulate their amount of satisfaction and even the amount of power they possess.

Ironically, this comes full-circle to the article's mention of stepping outside rules that are bad. The kids can now say, "I don't have to assign more value to green legos just because your game assigns more points to them." Some things still do have a certain degree of intrinsic value, so this won't always work. But they have been empowered to the extent allowed by the value assignments of which that they have control.

BTW, startup founders use this type of understanding to prioritize ideas that have a better chance of success.

"BTW, startup founders use this type of understanding to prioritize ideas that have a better chance of success."

Can you elaborate what you mean? It sounds intriguing, but I don't fully understand it.

From my previous paragraph:

'The kids can now say, "I don't have to assign more value to green legos just because your game assigns more points to them." Some things still do have a certain degree of intrinsic value, so this won't always work. But they have been empowered to the extent allowed by the value assignments of which that they have control.'

By understanding when value is more subjective versus intrinsic, founders can choose to work on something where the value is more intrinsic. And if there's nothing with true intrinsic value, then they at least look for things where more people are likely assign value. Founders probably don't really think about it like this, they just look for something that people want. But it can't hurt to understand the characteristics of value at this lower level. If you can consistently find, create, or buy value, getting rich isn't too hard.

Do you have any evidence these arguments always boil down to who has control of the raw materials?

I think access to intellectual capital and social capital are far, far more important. In the future, perhaps, access to raw materials will become more important. But now, you can get access to raw materials easily if you have the rest (intellectual/social capital) -- people will sell them to you in exchange for renting out your brain & the smoothly operating institutions of your well-managed community.

It is nearly as simple for a man in China to order a container of wood as a man in Canada. But you cannot simply order a container of culture, or a container of civilization, or institutions, or habits, or education. And these things set the west apart far more than access to raw resources.

Low-resource cities fabulously wealthy due to great social/intellectual capital: Hong Kong (where I"m writing from, a city built on a rock with a great port and not much else), Singapore (built on swampland), numerous others.

High-resource locations mired in conflict, poverty, and struggle: Democratic Republic of Congo; Guatemala; numerous others.

I agree with your post 100%, but I think I'm generalising more than you're thinking I am.

My cards out on the table: I'm not a student of Economics (a deficiency I intend to correct, as time permits).

In terms of evidence, I have none. However, I think I need to be clear as to what I mean when I say 'raw materials'. It's probably a poor phrase to use (I guess it has a well-defined meaning in Economics); I consider even intangibles to be 'raw materials'. As an example, education is the 'raw material' on which 'intellectual property' is built. As a web developer, the LAMP technology stack (for example) is the 'raw material' (along with many others, including education) on which websites are built (and aren't we hackers lucky that people make much of that technology available to us for no cost? There's huge value in those 'raw materials' for us. Most people in the world aren't so lucky). For me a raw material is anything that acts as an input into a process that leads to a monetisable output. Of course, money itself is perhaps the ultimate 'raw material' in this sense, creating an interesting situation where one of the raw materials used to create the desired product is the product itself. Perpetual motion machines may be a physical impossibility, but a perpetually expanding economy apparently is not.

There are certainly many examples of low-resource cities that do very well; at least, low in terms of the amount of stuff that can be dug out of the ground. These are obviously not the only saleable resources or those cities wouldn't exist (I'm not sure about Hong Kong, but didn't Singapore first become wealthy due to its strategic location?).

As to the high-resource locations mired in conflict and poverty, I would suggest that much of this conflict is indeed related to who controls the raw materials. Whilst this may or may not be true, I was more thinking originally about internet posts on economics and 'social justice' in my first comment, which seem to me to boil down to whether ownership of resources (of many types) should be 'more equitably shared' by some 'fairness' metric, or owned only by those able to compete effectively for them (or who just get lucky). Of course there are many threads on what is actually meant by 'more equitable sharing', since all participants seem to feel that their approach is the most equitable without exception :-)

Hopefully I've not led too many people down dead-ends with my rather wooly use of the term 'raw material'.

Ah, thanks for the clarification -- our thinking has a lot more in common than I thought. FWIW, I'm no economist either. I did major in Political Economy for a short while, but that just means that I had enough time to gobble up some conventional thinking on the matter (including that strict definition of raw materials) -- if I judge by my classmates in those courses, my studies are certainly no guarantee that I understand anything at all about the real world :-).

I don't have a lot of time right now, but in brief -- I like the way Warren Buffett puts it when he mentions that we're all indebted to the "ovarian lottery" for much of what we have in life... if he'd have been born in some poor African country, there's little chance he'd have had the success he has, because they don't have "raw material" (in your sense of the word) necessary to take his talent and create wealth out of it.

Also -- you're perfectly right that a lot of the conflict in a place like the Congo is caused by conflict over raw resources. I was using that sort of example to show how an abundance of raw material doesn't necessarily lead to wealth "in general" for the country; it can actually have the opposite effect.

In the trading game that aided the formulation of the teachers' ideas, it didn't sound like there was a way for the children to add value.

It's interesting that the article's core attitude is based on the idea that eliminating inequality is (or should be) the main concern. It would seem that socialist societies have demonstrated that when you focus on inequality, you end up stifling productivity. Maybe there should be more focus on productivity and advancement rather than inequality, although that's harder to do in the domain of Legos. When you do this, it's not about control of the raw materials as much as it's about who contributes the greatest value at their link in the chain.

It's interesting that the article's core attitude is based on the idea that eliminating inequality is (or should be) the main concern.

It would be appropriate at this point to zoom out a bit and remind everyone that we're talking about a playroom full of kids ranging from roughly kindergarten to third grade. Of course eliminating inequality (insofar as access to toys and play equipment is concered) is the point! As I stated in a previous comment, you can argue whether the teachers picked the best way to do it, but that argument does not change the underlying premise.

Maybe the underlying premise is flawed. Maybe it would be better to focus on teaching the children the fact that in this world inequality is unavoidable and how best to deal with it. After all, it's clear from the article that the teachers are going after something bigger than plain equitable distribution of the toys.

This is just my perspective as a parent, but I think the underlying premise is just fine, thanks. My daughter will have her entire life to learn how to deal with inequality by simple dint of being American. I don't need a playroom to teach her that particular lesson. Besides, there are outside forces to consider...if I pay for my child to have access to an after-school playroom, I have a right to expect her not to be unnecessarily or arbitrarily excluded from play. Again, just my perspective.

As I noted in my other comment, I think you can question the teachers' methods, certainly.

Ahhh, I see where you're coming from. I'm really interested in the socio-economic aspects of this, and the article was written in a way that prompted thought from that angle. Since I don't have kids and the concerns that go with them, I took that line of thought and ran with it.

I don't deny that the playroom might not be a good place to be doing socio-economic experiments. But since the article didn't seem to take that view, I'm interested in the discussion of the experiment. The question of whether they should have been performing the experiment is not a big deal to me.

I think you'll find it hard to find a more representative microcosm of what an unfettered capitalist society would look like than that of an unsupervised classroom...

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