Why is “more directly” good? Why is “incidental” value bad? I only care about the total value eventually created. That is the claim that was made, as I understand it—that investment eventually results in more total, global value.
Both trades may incidentally create value
Then I don’t understand why you said “Your position roughly corresponds to 100% of investment being rent-seeking”. It is my understanding that rent-seeking does not create any value, incidentally or otherwise. If buying popcorn “incidentally” creates value, then my position does not correspond to 100% of investment being rent-seeking at all.
The distinction between direct and indirect value is useful because consumption and investment have roughly similar indirect value, while investment has an additional direct value.
If investment and consumption are just as good as each other, then the direct value of investment must be zero, which corresponds to 100% rent-seeking.
If investment and consumption are just as good as each other, then the direct value of investment must be zero, which corresponds to 100% rent-seeking.
You are right, I was wrong: rent-seeking can also indirectly create value. Though it can also “destroy” some value by discouraging useful trades. And that doesn’t really work with 100% investment being rent-seeking (to be honest, I don’t really know what that would look like—is it just two people passing money between them, back and forth?).
Let’s also take a step back. It seems likely to me that we don’t really disagree much, but instead are confusing each other. It’s also very likely that you have a better understanding of econ 101, though it’s not clear to me how much.
The explanations you use seem to be based on fairly arbitrary (even if useful) categories and known relationships between those categories. I don’t find this very helpful. I’d like to see how the money actually moves, and what is done with it, step by step, to create different amounts of value in different scenarios (though I understand that is more work).
It is also unclear to me, which of your statements are “in practice, on average, true” and which are “a logical necessity”.
Why is “more directly” good? Why is “incidental” value bad? I only care about the total value eventually created. That is the claim that was made, as I understand it—that investment eventually results in more total, global value.
Then I don’t understand why you said “Your position roughly corresponds to 100% of investment being rent-seeking”. It is my understanding that rent-seeking does not create any value, incidentally or otherwise. If buying popcorn “incidentally” creates value, then my position does not correspond to 100% of investment being rent-seeking at all.
The distinction between direct and indirect value is useful because consumption and investment have roughly similar indirect value, while investment has an additional direct value.
If investment and consumption are just as good as each other, then the direct value of investment must be zero, which corresponds to 100% rent-seeking.
You are right, I was wrong: rent-seeking can also indirectly create value. Though it can also “destroy” some value by discouraging useful trades. And that doesn’t really work with 100% investment being rent-seeking (to be honest, I don’t really know what that would look like—is it just two people passing money between them, back and forth?).
Let’s also take a step back. It seems likely to me that we don’t really disagree much, but instead are confusing each other. It’s also very likely that you have a better understanding of econ 101, though it’s not clear to me how much.
The explanations you use seem to be based on fairly arbitrary (even if useful) categories and known relationships between those categories. I don’t find this very helpful. I’d like to see how the money actually moves, and what is done with it, step by step, to create different amounts of value in different scenarios (though I understand that is more work).
It is also unclear to me, which of your statements are “in practice, on average, true” and which are “a logical necessity”.
(I’m not sure if you’re confusing me for Paul. I just interjected with what I saw to be the reason Paul was talking about direct and indirect value.)
(I’m not confusing you with him, but I am assuming your view to be largely the same.)