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Comment by Jd | Hacker News Reader

I'm of the opinion this understates the problem.

First, it is an ethical problem. The idea of producing things is not taught in elite colleges, nor is the idea that it is possible to make a positive contribution to society (e.g. rms) without becoming superrich (no offense to those for whom this is their primary motivation).

Second, a lot of the products of which the GDP percentage is based upon simply involve repackaging and selling debt. (e.g. http://ow.ly/1sf8Rp ). In other words, a lot of the economy is based upon accounting tricks.

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Not all ideas can or should be taught in (elite) colleges. The framework to analyze any idea should be and generally is taught at colleges.

Repackaging and selling things is foundational to creating value. The insurance industry is perhaps the quintessential example. They create no direct expected value, and yet they create societal benefit by creating risk-adjusted expected value.

What is manufacturing but repackaging?

Insurance creates value, and so do banks. The problem really begins when the banks try to get more revenue than the value they can possibly generate. That's when it goes into bubbles and finally breaks. Insurance has its risks also, but the insurance system doesn't crash every couple years from itself (major natural events, terrorist attacks etc not taken into account).

Fair enough, but culture matters. When you're surrounded by a culture of people who glorify rent-seeking jobs like finance and lawyering, "building stuff" tends to be regarded as lower-status and as such gets less of the top talent, even though it's the most important thing.

Repackaging debt is not an "accounting trick," it's creating liquidity. Which in turn allows more more "real" transactions to take place, more trade, more production, more manufacturing, more jobs, etc.

It's an accounting trick that artificially stimulates the economy by tricking people into thinking their imaginary dollars are worth more real goods than they actually are.

So far, so good.

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