Hacker News Reader

Comment by perl4ever | Hacker News Reader

It is certainly true that the social utility of a company is not necessarily proportional to the number of employees, but it's not necessarily proportional to the profits either. A glass repair company that goes around breaking windows could make money without creating net utility. That is what many people see bitcoin as. Now, you can debate and argue about specifics vis-a-vis cryptocurrency, but there's a larger issue that bothers me. Why assume that making money means you are benefiting society, in general? I don't care for the assumption that profit is always evil, but the opposite assumption doesn't make sense either. Individual self-interest works marvelously to advance collective goals, like the cells in our body work together, but cancer and viruses also exist, and the reasons why they multiply and are harmful to a collective are very subtle.

View on HN

> Why assume that making money means you are benefiting society, in general?

Because when you make money, someone is paying you for a product or service. When someone chooses to pay you for your product or service, they are expressing a preference for that product or service over the money, and vice versa (you express a preference for the money over the product/service). Which means, that when money is exchanged for a product or service, both parties benefit. Value is created. The utility points of the universe increase.

I have a bridge to sell you.

Sure, that is a familiar explanation of the utility of trade from Econ 101. But it does involve simplifying assumptions.

What you're leaving out, is that "voluntary" transactions have effects on third parties who do not consent, and also true consent of those directly involved requires that they accurately and equally understand the consequences of their actions, which is often not true in real life.

I feel like there is a third issue that I have difficulty articulating, relating to the fact that people are bound to round small probabilities to zero, which means that there is an economy of scale to exploitative behavior.

> What you're leaving out, is that "voluntary" transactions have effects on third parties who do not consent

Sure, those are called externalities. I was simply explaining where the idea that trade generates value comes from. So, given that, generally we presume that trade is beneficial, unless/until someone points out an externality. Which, I certainly wouldn't make the case that there aren't any here, there are. But the way you argue against this activity is by pointing to specific externalities.

> I feel like there is a third issue that I have difficulty articulating, relating to the fact that people are bound to round small probabilities to zero, which means that there is an economy of scale to exploitative behavior.

I don't think what you're getting at has so much to do with probability rounding as it does with 'coordination problems' (http://www.oxfordreference.com/view/10.1093/oi/authority.201...)

Utility is an non-measurable unit with no connection to anything real that economics textbooks use to help people conceptualize basic theory. Capital creation versus rent seeking are concepts grounded in reality with real consequences. Creating money does not necessitate capital creation or increased well being. I suggest reading about the broken window fallacy to understand why you are wrong.

I'm definitely not wrong. The description I gave is completely accurate. It, however, may not be complete. The broken window parable does not actually in any way negate what I said - the purchase of the window still makes both parties better off.

I don't understand how you can compare violation of property rights (breaking windows) to a completely voluntary system such as Bitcoin, the private production and use of which violates no property rights.

I don't think that the harm of breaking windows is solely due to violation of private property rights. Maybe the windows are on a publicly owned building. Or, even if they are private property, there is harm done to the public as a consequence of the damage. People will take steps to avoid such damage. And conversely, maybe the mining of Bitcoin harms public interests too. I think it's easy to just assume away the issues that go beyond private interests if you identify morality with sacrosanct property rights.

Please provide a definition of harm that excludes the violation of property rights. We need not consider the difference between private property rights and property rights because these things are one and the same.

If you can come up with a logically consistent definition under which the creation of public property does not itself cause harm - I will be surprised.

Reply on news.ycombinator.com