Efficient Valuation of Societal Contribution

Discussion in 'Politics, Religion, Social Issues' started by fivepoint, Sep 20, 2010.

  1. fivepoint, Sep 20, 2010
    Last edited: Feb 21, 2011

    fivepoint macrumors 65816

    fivepoint

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    #1
    "In a free society, revenue is the measure of value a given entity adds to society."

    This statement in my minds suggests that in a free society where individuals, businesses, etc. are able to enter into agreements freely without force, coercion, market manipulation, etc. that money exchanged, revenue earned is a great (not the only) measure of value or of 'good' that an entity provides to society.

    For example, say you compare a Farmer and an NFL Football Player. The farmer makes 200,000 per year, and the football player makes 2,000,000 per year. Some might argue that the farmer 'should make more' because the farmer provides something much more valuable than the football player. However, if following the quote above, you'd come to a much different conclusion. Since consumers are able to freely make a decision on which to consume, which not to, how much they're willing to pay, etc. the revenue that each individual receives is already a much more efficient measure of the value these individuals provide to society than any other model that can be drawn up.

    In this case - The farmer plays a very important role in society... producing food the citizenry needs to survive, he produces meals for people which society is willing to pay $20.00 for per day. $20.00/day times 1,000 citizens times 10 days. He can feed 1,000 citizens for 10 days. The football player on the other hand produces a service (entertainment) which is valued at significantly less per citizen. The average citizen values (is willing to pay $0.10) his entertainment at ~$0.10 per game. $0.10 per game times 10 games times 2,000,000 viewers. However, since many more people watch the game and gain entertainment from it than could have possibly been fed, the football player actually produces 10x the value (and consequently revenue) as the farmer.

    Does this essentially describe this how the free market system works?
    Is the free market the best and most efficient method to place value on societal contributions?
    Do you agree or disagree with the statement in question? Why?
    How does government manipulation of the free market through subsidies, excess regulations, etc. affect this model?
    What are the political ramifications depending on what your position is? Discuss.
    Now, if a person believes in this type of thing, is that idea compatible with disdain for the self-made rich? Does it speak at all to the idea that the rich can only become rich on the back of the poor? (Oppressor vs. victim kind of mentality?)
    Is this how the system in America works today?
    Obviously supply/demand plays a role in determining the consumers valuation of the good/service...
    Obviously the real world is much more complex, so where does the variability come in and how does it affect the result?
    What are the alternatives?
     
  2. niuniu macrumors 68020

    niuniu

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    #2
    Pretty much any average man is able to do farmwork with some training. Same as most jobs. OTOH Entertainers and sportsmen are usually an elite, either through talent, or specialist training. They might be thick as pigpoop, but you couldn't easily replace them (Wayne Rooney anyone?)

    I think that really skews any attempt to define contribution and value..
     
  3. fivepoint thread starter macrumors 65816

    fivepoint

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    #3
    Yes, supply/demand plays an incredibly important role in the consumers' valuation of the product. This went into the calculation for what the service/product provider will earn per unit of good/service.
     
  4. .Andy macrumors 68030

    .Andy

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    #4
    What an absolutely dreary view of society. A society where money is the be all and end all of deciding what is "good" is not a society.
     
  5. chrmjenkins macrumors 603

    chrmjenkins

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    #5
  6. NT1440 macrumors G4

    NT1440

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    #6
    As always, the world is only about money in fivepoint's (and far too many people's) view.

    Sigh.
     
  7. Sydde macrumors 68020

    Sydde

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    #7
    No, I believe it is worse than that. Attempting to apply a quantitative metric to "one's contribution to society" using the perspective of market economics as justification lacks validity. If your market worth is low, your contribution must be less.

    But there are elements missing from this picture. I believe that there is a median range in which you contribution is fairly consistent. Below a threshold (say, about the 33rd percentile), you are likely to use more social services than your contribution itself supports, though that may not be the actual case. Above the upper median bound, the cost to society to maintain your cashflow and wealth almost always becomes more of a burden than your real contribution accounts for. This is often the case because increased wealth leads to a greater personal sense of entitlement which leads to a greatly reduced desire to participate in society itself ("I am rich, which puts me above all that").

    The poor tend to be something of a burden on society. The wealthy, OTOH, are an anchor around society's neck that will drown us all in the "rising tide".
     
  8. NT1440 macrumors G4

    NT1440

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    #8
    Hence the dire importance of the middle class, the sweet spot.

    Unfortunately our policies are geared towards the rich, making them richer, while everyone else falls apart and sinks towards poverty.

    The middle class has stagnated for far too long in this country and its about time we have someone to try to restore them.
     
  9. flopticalcube macrumors G4

    flopticalcube

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    #9
    What about someone who earns minimum wage but is an active volunteer in charitable organizations?
     
  10. skunk macrumors G4

    skunk

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    #10
    Utterly worthless. Need you ask?
     
  11. NT1440 macrumors G4

    NT1440

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    #11
    If the charity isn't money, it doesn't matter.

    Notice how we applaud companies that destroy the earth and harm people in the 3rd world every time they make a $10 million donation, ignoring that the money is probably less than .01% of profits made from such actions.

    Money is king in capitalist land.
     
  12. iJohnHenry macrumors P6

    iJohnHenry

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  13. citizenzen macrumors 65816

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    #13
    +1

    Might as well make something of myself and start selling my organs to the rich.
     
  14. MattSepeta macrumors 65816

    MattSepeta

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    #14
    Money

    Money pays my bills, feeds me, enables me to work and produce goods and render services to the benefit of other people, keeps a roof over my head, keeps my cat fed, etc...

    Money is not evil. It is simply a trading commodity.

    :confused:
     
  15. NT1440 macrumors G4

    NT1440

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    #15
    No one said it was evil....


    When it becomes more important than people however....
     
  16. MattSepeta macrumors 65816

    MattSepeta

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    #16
    Well it was certainly implied...

    And about the minimum wage guy that does charity....

    If I was poor I would rather be helped by the rich-guy-who-never-stepped-foot-in-a-homeless-shelter's money than by the minimum-wage-guy-volunteering-time's time.

    Money is a good thing.
     
  17. NT1440 macrumors G4

    NT1440

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    #17
    Yet again you equate criticism with a hatred of something. Is it that you refuse to note the difference or can you really not figure it out?
     
  18. LethalWolfe macrumors G3

    LethalWolfe

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    #18
    You would rather get $5 from a rich person than have a volunteer teach you trade that could greatly increase your chances of getting a job?


    Lethal
     
  19. Shivetya macrumors 65816

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    #19
    I don't see the football star or movie star as really generating revenue, they are more consumers to me than otherwise. The farmer, who might earn 200k or the the doctor who earns 200k is more of a producer because their output has tangible effect on others.
     
  20. NT1440 macrumors G4

    NT1440

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    #20
    Serious question: There are farmers that seriously make 200K in profits when all is said and done? :confused::confused:
     
  21. iJohnHenry macrumors P6

    iJohnHenry

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    #21
    If you count being paid not to grow certain crops, perhaps. :rolleyes:
     
  22. NT1440 macrumors G4

    NT1440

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    #22
    Yea, our subsidy system is ****ed up. Its sad that its also a major contributor to damaging our lands.
     
  23. LethalWolfe macrumors G3

    LethalWolfe

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    #23
    I think the people that pay top tier talent 10's of millions of dollars would disagree with you. For example, star athletes like Peyton Manning get huge paychecks and multimillion dollar endorsement deals because, directly and indirectly, they can generate a profitable ROI for the people cutting the checks.


    Lethal
     
  24. Raid macrumors 68020

    Raid

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    #24
    The answers to many of the questions asked in the first post are the topic of many economic papers. I myself did a paper in my second year of Uni, where I attempted to evaluate the 'worth' of a human life on a consumption approach. People are often tempted to look at it from that perspective because money is an easily quantified and tracked.

    The problem is that money or revenue generated does not really reflect worth in society; it only reflects what a person is willing to pay given their income or needs. Higher income earners are willing to pay more for a particular good than lower income earners simply because the percentage of income is less and the opportunity cost of the next dollar means more to the lower income earners. Also if the price of food skyrocketed (say a famine hit and only farmers could produce food) I guarantee you that the farmer would get more money for what he could produce and since consumers are spending more money on base (Maslow's hierarchy) needs, the football player wouldn't be packing them in to the stadium and would eventually take a paycut.
     
  25. Sydde macrumors 68020

    Sydde

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    #25
    This becomes a little problematic when I have to make a choice: do I use my land to produce a thousand tons of wheat, providing for food for a lot of people, or do I mine a thousand ounces of gold out of the hill that takes up half of the south forty? If I choose the latter, my ROI will almost certainly be much higher, I will probably not have to put as much effort into mining as I would farming, but I might also very possibly render my land no longer arable, in case that famine does hit hard. The fact that the gold is thousands of times more valuable per unit weight can lead to some unwise decisions. But then, capitalism (or what we call capitalism) is well known for its absence of pragmatic foresight.
    In the real world, the situation is very often the reverse. The limited capital available to poor people can force them to spend more on essentials because they simply cannot spare the money to take advantage of economies-of-scale. Wealthier people can buy in lots, where it makes sense, and can sometimes exert influence or forge alliances that allow them to spend even less of their relative income on essentials - one of the classics ways of getting rich in the first place.
     

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