Time Value of Money

[Flubber]

David Floyd has highlighted the key concept that Kid will not accept

[Kidlicious]

Originally posted by Japher
But the gold still doesn't cost 20cents an ounce like it did back in 1849... why is that?

Why is this relevent? I'm not talking about price.

[Flubber]

Originally posted by Solomwi


Ahem, you had others helping.

Sure-- many others but I just mentioned vel since we did decide to leave kid's utopia and preserve capitalism on a tropical island ( since apparently kid's utopia can only work if its worldwide-- I presume so that all the talented and skilled people don't flee)

[Kidlicious]

Originally posted by David Floyd
Simply put, a good or service is only as valuable as is agreed on by the people who are giving/receiving the good/service. Period.

Go back in time and tell that to the real Adam Smith. In the Wealth of Nations he made the true claim that wealth (value) is only created by the production of goods, not by simply trading goods.

[David Floyd]

Why was there a change in price? What does it matter? Whe're talking about value.

You just justified my post

[Solomwi]

Originally posted by Flubber


Sure-- many others but I just mentioned vel since we did decide to leave kid's utopia and preserve capitalism on a tropical island ( since apparently kid's utopia can only work if its worldwide-- I presume so that all the talented and skilled people don't flee)

I was ready to pack for the island, as was LoA, if memory serves.

[Kidlicious]

Originally posted by Flip McWho
The only reason the monetary system is used is because the world grew to big for the barter system to work. I have a funny feeling that the barter system is more in your world view but I could be wrong.

The monetary system was created so that people could consume goods and services without doing any work.

[David Floyd]

Go back in time and tell that to the real Adam Smith. In the Wealth of Nations he made the true claim that wealth (value) is only created by the production of goods, not by simply trading goods.

What's your point, Kid? Why are you equating "wealth" and "value", as if the two have the same definition? An item's economic value simply refers to how much "wealth" is required to obtain the item. You're (well, Adam Smith) quite right, new wealth can only be created by new production (but then again, wealth can be transfered around by trade, and this transfer of wealth can lead to a more efficient use of wealth, leading to more production and thus more wealth), but the amount of "wealth" a country or individual possesses has little to do with the value of goods and services.

[Japher]

tulip bulbs...

[Kidlicious]

Originally posted by Moral Hazard

Who cares? Work is not maximized in a capitalist system. Only money is.

So in your little world, you measure everything by number of total hours it took to produce something? The efficient allocation of capital (accumulated labor) causes the greatest number or quality of goods and services to be produced at a given amount of labor. Quality and quantity of goods and services is measured in dollars. That is how I would define value not in hours it took to produce.

Magic

[Flip McWho]

Kid. Everyone is trying to tell you that labour has no inherent value. The value is decided by what the market is willing to pay for it and what the labourer is willing to accept. Moreso on what the market is willing to pay. Using David's example you could make yourself a self employed ditch digger demanding $40/hr but noone is going to be willing to pay that. In fact people are probably more likely to think that the person charging that much is a greedy capitalist.

Take my job for example. I work in a produce department in the local supermarket. They believe my labour is only worth $9.50 an hour and as such are only willing to pay me that much. I may believe that my labour is worth more than that but trying to find a supermarket willing to pay what I may consider to be "fair" wages would be a mission and a half. In fact in the region I live in, the supermarket I'm working at is probably the one that will pay the best. I don't believe I'm being exploited, In fact I'm happy to get out of bed and drag my ass of to work.

However one thing I do wish is that pay rate could be increased based on meritocracy. The harder and better worker you are the more money you'll get paid. Hell I work twice as hard as some of the others in my department (I've been told this by my superior, and please don't take this as arrogance, I mean afterall it is a supermarket job ) and well still get the same wage as those that work less hard. Of course some would say that means I should cut my work efforts down, but my work ethic doesn't allow me to do that, so I choose to work harder and still get paid the same. What do others think of meritocracy by the way? Just to go on a bit of a related tangent.

[Kidlicious]

Originally posted by David Floyd
but the amount of "wealth" a country or individual possesses has little to do with the value of goods and services.

I couldn't have said it better myself. But now you are of course talking about stockpiles of money. This is not the way Adam Smith defined wealth. He defined wealth as the production of goods and services, and specifically called the stockpile of money, not wealth, and therefor nothing of true actual value.

[Iskandar Reza]

Who is this fool?

[David Floyd]

Kid, do you seriously think that a wheelbarrow that takes 12 hours to produce is worth more than a wheelbarrow that takes 6 hours to produce?

While value is certainly relative, no one who wants to make money would take your viewpoint - that person would understand that producing wheelbarrows in half the time leads to greater profit, and most people would consider that a greater value.

You might not, and that's fine, because like I said, value is relative - you might feel that morally, it is more valuable to compensate working harder to a greater degree than working smarter, and that's fine. You'll just lose money in the long run doing that. But that may not be important to you.

[Flubber]

meritocracy GOOD-- The problem in most organizations is favoritism when assessments of merit are done. My job has a base salary plus a discretionary bonus component-- When there are not measurable performance indicators on all performance criteria, you are left with the judgement of the managers