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Comment by corey_moncure | Hacker News Reader

It's very easy to understand if you just think about the basics. Put the books and academic theories back on the shelf.

In the USA we want "good" jobs that come with personal fulfillment, agency, mental stimulation... great. We also want free healthcare, free education, free everything. Fine. But at the end of the day our money has to buy things of actual value, even as we provide the aforementioned niceties, such as food, housing, medical equipment, computers, i.e. manufactured products, which can only be made by soul-crushing labor and toil.

There's a difference between productive labor (creating value) and service (moving value around). Our currency loses value because too much of the economy is constituted by unproductive jobs where people just attend to each other instead of creating any value. 1.2 trillion dollars on health care every year. 800 billion dollars on welfare. The wolves are at the doorstep.

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> Our currency loses value because too much of the economy is constituted by unproductive jobs where people just attend to each other instead of creating any value. 1.2 trillion dollars on health care every year. 800 billion dollars on welfare.

I think you're almost there but not quite. It's not that we're spending money pushing people around. It's that we're spending people pushing money around. If medical spending were focused on medical equipment, facilities, and professionals, we would free up huge amounts of resources. But we have legions of hospital and insurance administrators whose entire job is to fight against each other over billing. Those people are resources who could be used to produce things, or provide care!

You're almost there, but not quite. ACA incentivizes the disease insurance companies to spend more on disease care (machines, drugs, processors, etc.), not to ameliorate costs. Executive bonuses, marketing, overhead, almost come from 20% of total costs, so the only way to get a bigger bonus is for the whole pie to grow.

Even before that, litigation encourages the same.

Companies (hospitals and the like) in the US resell (or used to) perfectly good equipment abroad with a huge discount after it's been used so that it can be replaced with the newest model with the shiniest bells and most expensive cost to avoid a lawsuit.

The US taxpayer already pays for the best socialized medicine system in the world[0], our government/compulsory spending on a per capita basis ($10052) is higher than the nation (Germany) with the next highest overall per capita spending ($7383). We are being ripped off. Anyone who tells you we need to raise taxes to pay for Medicare for all is a friend of the medical industrial complex, not the people.

[0]https://data.oecd.org/healthres/health-spending.htm

The great thing is that we can all blame our own political bogeyman (ACA) for healthcare costs for expensive medical equipment bought to avoid lawsuits, and not say, the enforcement of HIPAA on electronical data 17 years ago. The answer will surely lie in first blaming a political enemy, then vaguely hinting at something relevant (litigation).

> 1.2 trillion dollars on health care every year. 800 billion dollars on welfare.

You accidentally forgot the $800 billion for the military-industrial complex every year (it's easy to miss, I know).

One could argue that much of that at least produces actual goods rather than the latest SV startup. At the end of the day there is still a gun produced even if we don't like it. Meanwhile exploiting pizza arbitrage is just a middleman sticking himself in something.

If the goods aren't useful to anyone (and a lot of the military's hardware isn't useful even by the military's own estimation), then producing them is a worse-than-pointless exercise. Better to do nothing at all than to do active harm.

HIMARS appear to be quite useful in Ukraine.

"Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.

"This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter with a half-million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people. . . . This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron."

US President Dwight Eisenhower, 1953 https://en.wikipedia.org/wiki/Chance_for_Peace_speech

Could you explain that delineation a bit more... at the end of the day everything is just serving others, including manufacturing. Mining minerals, the guy building my deck, etc., they're all things I buy to use for me, which is a service. I'm going to enjoy that deck about the same as I do the TV I watch on streaming.

If you're talking about making machines that make everyone more productive... then you're back into IT and Finance allowing everyone to be more productive... just as much as robots and factory lines. And at the end of the day it's still just goods people buy or use.

If you're willing to pay someone to move value around, then they are in fact creating the value that is == to what you're willing to pay them. Otherwise it would not be advantageous to pay them to do it, so you wouldn't.

Arguably much of those services are to try to recover a portion of value that we lose by default due to bad decisions beyond our control.

You pay for an Uber, or you pay for a car and all of its associated costs, and pay with your time sitting in soul-crushing traffic either way, because your municipality responded to population growth by building incredible sprawl and dangerous roads with no alternatives instead of a development and transit infrastructure that scales. Or you pay premiums and copays and various fees as tribute to the insane byzantine healthcare system that the U.S. has because there is no simple public option or sane way for providers to communicate information to each other. Or you pay 4x the cost for 1/4 the speed for Internet because $TELCO_GIANT has a monopoly and lobbied the municipality not to compete.

We have incredible, jaw-dropping amounts of misallocated value, with expensive services willing to sell you back a fraction of that value at an outrageous price. I don't think I would call that economically productive.

Yeah totally agreed with all of this. It’s just a question of what you want to consider the context and what you want to consider the more mutable “subject” of your inquiry. A more expansive view of context will give you more ideal options, but will also get harder and harder to manipulate.

The context of the person you replied to was:

> Our currency loses value because too much of the economy is constituted by unproductive jobs where people just attend to each other instead of creating any value.

Which is a broad enough context for my point. The incredible inefficiency of the U.S. economy means that it is not providing the quality of life to its people that our per-capita economic activity suggests that it should be. In the aggregate, there's a lot of people paying a lot of money and getting a crappy life in return. That manifests itself in, among others, physical/mental health problems, constant economic precarity, overconsumption of natural resources, degradation of public services, profligate time-wasting, frustration with each other and one's self, and unachieved potential. And those things put the U.S. on the path to long-term decline.

After you account for externalities, and the fact that much of American economic activity would not exist if it simply had a better-structured society to begin with, the amount of value it actually creates starts to look a lot lower.

But the value created is artificial and the result of rent-seeking protectionism or industry-lobbied barriers to entry.

If it's so easy to understand why does nearly everyone seem to not understand it? Maybe the obvious answer you found has flaws?

There's a phenomenon where some things can be too obvious to see.

Personally, I think most people know their job is largely bullshit and they kind of like it that way. Or are just fearful of what the alternative would mean.

There’s also a phenomenon where people are convinced they have an obvious answer everybody else, including experts in the field, missed.

Your path to a better world is less healthcare, less help, and more soul-crushing labour?

> "In the USA we want "good" jobs that come with personal fulfillment, agency, mental stimulation... great"

That doesn't so much depend on the type of job, it depends on the management environment and coworkers. People can be happy with a sense of fulfillment and agency, or unhappy without those things in both skilled or menial, high or low paid jobs.

> "i.e. manufactured products, which can only be made by soul-crushing labor and toil."

In Henry Ford's autobiography, he wonders at the factory worker who is happy dipping metal components in liquid, with only the gentlest wave of the hands as their labour, over and over all day, and cannot be tempted by money to do anything more interesting or complex.[1]

Are the people making James Webb, or ASML's EUV-lithography machines or X-Ray machines doing soul-crushing labour? Are the people making hand-made wooden furniture doing soul-crushing labour with no agency and no mental stimulation? And, more importantly, do they need to be? Is that the only way we can imagine work and jobs? Does labour necessitate micromanagement, time tracking, awful bosses, skeleton staff, high stress, squeezing for maximum value extraction? Couldn't we change that instead, and keep the healthcare and welfare?

[1] in as many words; I forget the exact anecdote.

> food, housing, medical equipment, computers, i.e. manufactured products, which can only be made by soul-crushing labor and toil.

Can you show that labor is the bottleneck here because I don't think it is. Agriculture is more and more industrialized and the issue is more stuff like fertilizer and fuel prices, and also shipping issues. All due to war. Housing is made expensive because no one wants a poor (hence annoying - so people think) neighbor. Medical equipment and computers, actually I really don't know enough about how those are made to say.

Since the financialization of the economy in the 70-80s, the economy has bifurcated between "productive" parts which ate well off debt and globalization, and the rest that has had to deal with the fallout of de-industrialization and shift towards a service economy with lower paying, lower skill jobs that are less secure overall.

Politicians have just kept digging us deeper into the hole because while it is not sustainable there is no turning back without major social upheaval and massive uncertainty.

Service has value - I love someone else doing my laundry. It also allows me more time to create value by writing code.

I actually think services create more value than my code, so I’m unclear why I get paid so much.

Supply and demand. There are more people who can do laundry than can write code. It may not always be that way, but it is that way now.

The parent isn't speaking about paying someone else for their manual labor. They're speaking about administrative overhead required to operate a business.

Think the accountant that your clothes washer has to hire just to stay out of jail. (theoretically, of course)

That provides value to the government which in turn provides value to its citizens. (theoretically, of course)

At some point overhead is actually overhead, and not value. It's pretty much a given that all regulation has some amount of inefficiency, and the inefficiency is not value.

One slight adjustment to your thinking, tech titans create massive value: "In 2021, the Big Five tech giants—Apple, Amazon, Google (Alphabet), Meta, and Microsoft—generated a combined $1.4 trillion in revenue."

https://www.visualcapitalist.com/how-big-tech-makes-their-bi...

Only if one assumes that revenue is the same thing as "value" in this context, which it clearly isn't.

So what is "value" then? Seems like you're hinting that it's some subjective, personal impression more than anything else.

The parent's point is that revenue is not equal to value. Determining actual value generated by tech companies is tricky

Agreed. How much value do we place on entertainment? stimulation? storefronts?

Have you thought about why it's tricky? Maybe because each person on this thread has a different perception of what the word 'value' even means. If you start with an unclear definition, you cannot hope to arrive at a clear answer.

Advertising creates revenue, but does it create value? Imagine Coca-Cola pays Google a bunch of money to run ads. You are thirsty and go to a store and decide between a Dr. Pepper and a Coke. You choose the Coke. Has this process created value?

I would argue that they create a secondary item. The same way lumber is created from wood, and then picture frames from lumber. Value is added, and this creates revenue. Here, the value is virtual, but it's still value -> the market says so. I could argue this is just a service, but if that were true it would be worth less and the market would correct.

Of course advertising creates value. It connects buyers and sellers. It generates demand for products that are built and created by other people. You can disdain advertising all you want, but occasionally an ad connects with you and presents you with what you're looking for. In aggregate, that has tremendous value.

Advertising would create value if it would only serve to connect buyers and sellers, but instead modern advertising serves to "generate demand", as you mentioned. That means making you, artificially, usually using emotions and psychological tricks, spend money on something that you wouldn't and shouldn't spend money.

We can thank Edward Bernays for single-handledly ruining the world.

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