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Comment by jpmattia | Hacker News Reader

Great essay. I was struck by this though:

> A woodworker creates wealth.

There's an odd can of worms in that simple statement, which is roughly reduced to: How do you measure wealth?

Part of the controversy is that wealth is often a summation of net worth in [dollars | yen | euro | yap stones]. However, if you look at the simple act of the woodworker selling a chair, the total dollars in circulation before and after the woodworker sells his chair is constant. Therefore, the woodworker is now in possession of a greater percentage of the total dollars, and consequently "inequality" has now increased, due to the (mostly) zero-sum definition of the money supply.

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Not exactly. Before the woodworker builds the chair, they have some wood. The value of the wood is less than the value of the chair. So building the chair increases the total value of the economy.

The actual sale of the chair to someone else is a NOOP, it’s just shuffling assets around.

This is the problem that I and many others seem to see. The people getting the richest in our current society are the ones doing the asset shuffling and not those who create the wealth.

(BTW,what is NOOP?)

No-Operation. It’s something from assembly programming, an instruction that does nothing (but is sometimes necessary for alignment purposes)

And yes, that’s the issue. The rich are purely asset-shuffling.

Most of the speculatant markets is just that. It doesn’t create any wealth for society, but just takes from people.

> The actual sale of the chair to someone else is a NOOP, it’s just shuffling assets around.

Nope, because the chair in the woodworker's posession is worth less to him than dollars, and the dollars in the customer's posession are worth less to him than the chair. The actual sale leaves everyone better off.

The woodcutter, the truck drivers who transported the wood, the factor who bundled and graded it, the woodworker, the customer, the Internet entrepreneur who built the website the customer used to compair & contrast chairs: all are better off than if the entire Internet-chair-buying industry were artificially restrained. There are externalities regarding over-harvesting of wood, truck pollution, road construction, factor oligopolies, unsafe chair construction, Internet oligopolies and consumer-protection which need addressing as well, of course.

And yet, in an efficient market, the woodworker charges almost exactly what the dollars are worth to the customer. And the customer pays no more than what the chair is worth to the woodworker. So they don’t “both benefit.”

As to whether the industry is artificially constrained, I am not arguing for artificial constraint, so I don’t need to respond to that. My point was that making a chair creates wealth. That's true whether you make a chair for yourself, or for someone else.

> it’s just shuffling assets around.

That's kinda what I'm saying, since the money supply is fixed. The act of selling the chair puts a greater percentage of the money supply in the hands of the woodworker, since the value of the wood (and other COGs + paid labor) is less than the value of the chair.

pg is declaring that "creating wealth", others are declaring that "wealth aggregation", which contributes to inequality.

But really the heart of the matter is: How is wealth measured? Because if you do it in a currency with a (relatively) fixed supply, then people who profit more than they spend are going to be wealth-inequality creators.

That depends on the supply and demand ratios of wood and chairs. A chair isn't intrinsicly worth more than wood, and by making chairs you dilute the value of chairs.

If I make a trillion chairs, I'll have to drop the price of them to sell them, and the bottom will fall out of the chair market. Meanwhile, wood will become scarce and the price of that will go up. You'll probably even end up with an industry of people dismantling chairs into wood for use in other purposes.

So it's not a simple as "creating wealth" at all.

> and the bottom will fall out of the chair market

Please tell me that was intentional?

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