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February 17, 2012

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Marketing is not necessarily just value transfer. It can be also value creation if it makes people more aware of existing products.

You should make a blog post on what you call the "Helping occupations".

Ultimately everyone in America will become part of this field, like in Western Europe.

HBD negation = bad medicine, bad prophylactic measures and dysgenism = more medical acts performed, more social work and more welfare.

Once it has started it becomes exponential, like in France --- all working French women work in hospitals, social services or education, and it ain't going to get better.

where would you place engineers, programmers and architects who design infrastructure like roads and skyscrapers, communication devices like cell phones and the internet, and production capital like robotics and industrial machinery? all these things are necessary for the functioning of a modern economy, but unnecessary for survival. so you can't really put them in the base level of value creation, and you certainly can't say they're transferring value.

(hell, does any white collar worker *create* more than the engineer in terms of converting mental energy into physical product? what other occupational class has that kind of impact on the standard of living of millions? if we're comparing across worker classes, it could be argued that blue collar workers like builders create the most (you can't argue with gleaming towers of human achievement). and artists -- a group which falls outside the conventional class hierarchy -- have the highest *pure* creation value, since they literally bring forth products from nothing but their imaginations, works which lots of people desire.)

office buildings and roads aren't technically necessary for survival, but they're necessary for anything to get done. you could squeeze the white collar engineer class into the second value creation group, i suppose, but their work would be closer to the necessity side than the luxury side.

government workers are mostly parasites, and you should make a group title which reflects that reality.

lawyers fall into a gray area between parasitism and usefulness.

All industries have some portion of value creation and value transference. And many jobs with value transference have some component as value creation. Acknowledging this continuance rather then an absolute would enhance the understanding.

You also have to acknowledge that no market is perfectly efficient, there are a variety of frictions that make perfect markets impossible. As such, nearly every industry will have some value transference even if you have a pretty good set up. The goal of public policy is to limit value transference as much as possible without damaging value creation. Where the marginal affect of the two cross is where you have gone to far either way.

So for instance, my appraisal of finance is that its about 80% value transference. However, I doubt that we could ever come up with a system in which there is not a high amount of value transference. My goal with the finance sector would be to return it to its long run % of GDP, which would be about half what it is now. Ideally, maybe I'd like to get smaller, but I just don't see how its possible to squeeze all the value transference out of that sector.

I do marketing (value transference) within retail stores (supply chain) for products and/or services that are generallly between necessities and luxuries (value creation). How would you classify me?

Really, even finance and marketing can be value creation if done correctly, thought they often aren't:

Marketing: I have a medical condition, but I didn't realize there's a drug that can help me. The marketer brings the manufacturer and the customer together, creating value for me that I wouldn't have realized in the absence of the marketing.

Finance: The paradigm example would be a venture capitalist who enables someone in the value creation business to create value.

Hate to be a smart-ass, but I think this material was already ably covered in Richard Scarry's seminal work, "What Do People Do All Day?"

http://www.amazon.com/Richard-Scarrys-What-People-All/dp/0394818237

How about actors and athletes?

There are also many industries that produce products used by other businesses. They are creating value, but it is value to other businesses. This ranges all the way from office furniture to machines/equipment/software used to manufacture goods.

Work, which produces little, but is surfacially similar to value creation.

The organization legitimizes its funding with examples of actual value creation, explaining "This is what also we are doing!" It's a subtle but widespread form of value transference, prevalent in big bureaucracies, because from far away it is indistinguishable from productive work. The difference is that others would hardly notice if they simply stopped doing what they do.

Whatever scheme you come up with, make sure it maps on the list of occupations in the 2010 census.

http://www.census.gov/compendia/statab/cats/labor_force_employment_earnings.html

The list of occupations is here as an Excel file

http://www.census.gov/hhes/www/ioindex/2010_OccCodeswithCrosswalkfrom2002-2011nov04.xls

I'd like to see where illegal drug dealers fall under, please.

Also, your thoughts on why more workers aren't becoming Value Creators.

I work in an ostensibly value-creating field (civil and environmental engineering) -- many times, though, my efforts are slowed by OTHER engineers, namely, those in the employ of the state Department of Environment and Natural Resources, the town planning office, etc ., although they are only acting in accord with SWPL environmentalist diktat. So some engineers really may be accused of value transference, or, at least, value hindrance!

Even in engineering, HS, you must market yourself. The firm principals are the guys who are buddy-buddy (bonds developed through golf, college fraternities, church and civic organizations) with developers, contractors, and public sector engineers, guys who can tell the developer why WE are the firm who should be entrusted with bringing their vision for a new 'lifestyle center' to fruition, can sweet-talk a contractor into eating cost overruns, and so on.

I would like to see more discussion about engineers getting MBAs, what their career outlook is, changing careers as an engineer with an MBA, MBAs versus the Masters in Engineering Management degree, and so on. Fascinating stuff to me.

Where would you put stuff like prostitution, drug dealing, etc., that we tend to think of as part of the underground/shadow economy? Does it make sense to think of these and other transactions as inclusive in other sectors (i.e. prositution is a "personal service") or should they be called out separately?

off-topic: have you come across this blog?

http://www.singularity2050.com/2010/01/the-misandry-bubble.html

I think you are unwarranted in your hatred of value transference.

There are really two types of value transference: supply transference and demand transference.

A university president would be an example of supply transference. A venture capitalist would be an example of demand transference.

Ironically, you are a die-hard Romney supporter, and Romney's entire career has been based upon value transference.

I wrote a post about this on my blog: http://secularblood.wordpress.com/2012/02/17/half-sigmas-value-transference-theory/

HS,
If I may interject:
Do you believe value transference is congruent with economic rent? What constitutes value creation?


In my opinion, value creation means creating a good or service which is greater than the sum of its parts. Therefore, primary and secondary economic sectors create value while the tertiary sector transfers that value. (agriculture, mining, and manufacturing make stuff while sales and marketing and other services just move that stuff around).

"This is kind of a skeletal outline for some sort of possible future blog post."

Dear Singularity, not value creation again.

Could you skip this entry, please?

Where does R&D fit in there? I would call it value creating in the general case with plenty of exceptions for those just jacking off and not actually trying to do anything useful.

What about a computer programmer working on a government contract?

Matt in RTP,

"I work in an ostensibly value-creating field (civil and environmental engineering) -- many times, though, my efforts are slowed by OTHER engineers, namely, those in the employ of the state Department of Environment and Natural Resources, the town planning office, etc ., although they are only acting in accord with SWPL environmentalist diktat. So some engineers really may be accused of value transference, or, at least, value hindrance! "

Obviously, this depends on the value of the regulations in question. I'm always uncomfortable with the hate everyone throws at government employees. In my experience, they are no more or less likely to be involved in value transference then private employees. I'd take a guy at the public transit authority planning traffic patterns over a hedge fund manager any day.

"Even in engineering, HS, you must market yourself. The firm principals are the guys who are buddy-buddy (bonds developed through golf, college fraternities, church and civic organizations) with developers, contractors, and public sector engineers, guys who can tell the developer why WE are the firm who should be entrusted with bringing their vision for a new 'lifestyle center' to fruition, can sweet-talk a contractor into eating cost overruns, and so on."

Its all just sales. Some firm will be chosen. If the purpose of sales it to fool the client, rather then inform him, then salesmen aren't creating any value. As my experience with sales is that its all about fooling clients and playing on their biases, its mostly value transference.

Some firm is going to get the business, so unless one is genuinely better who cares who gets it. Salesmen don't show people who the best firm is, only which firm is paying the highest commissions, so they aren't adding value.

"Helping occupations – education, health care, social work"

Education and social work are massive value-transference schemes (first and foremost from the taxpayer to teachers and social workers).

Obama is turning health care into a massive value-transference scheme.

Pretty much anything the government touches is necessarily value transference.

quibids.com is a great example of a business with a very high value transferrence/value creation ratio. It's a penny bidding site where people buy bids in bulk and pay $0.60 for each penny to five cent (or what ever tiny cent denomination) bid they place. All losing bidders lose their money but have the option to buy the item at a high markup minus the amount they bidd. So let's say there were a total of 2000 bids for an ipod and the winning bid was $20, quibids made $1200 minus the cost of the ipod. It's a win-lose business strategy that feeds of people's greed.

JP,

Healthcare is totally not a value transference scheme pre-Obama. That is why we pay twice as much for worse results. No value transfer there.

When I was younger I worked for a time as a tutor and a teachers assistant in both public and private. It doesn't seem to me it was all that different. In public they had dumb rules and we had to waste a lot of time and effort catering to dumb kids. In private we has a bunch of dumb rules and we wasted a lot of time catering to the neuroses of helicopter parents regardless of whether they had any idea what they were talking about. In public the lack of firing potential meant you got a few lazy teachers. In private the presence of firing potential meant people spent a lot of time kissing ass, playing politics, and CYA (i.e. doing a lot of things of no educational value so not all that different from those that do nothing).

All large organizations are dumb. And all sectors, public or private, usually have to deal with similar difficulties when it comes to market structure. I've worked at megacorps and for the government sector, I didn't notice a huge difference.

HS,

Government mandated and overseen schools produce people who (as you've pointed out) literally consider HBD talk sacreligious. Educators are fucking you; do you consider this "Helpful?" Are you helped by having your speech curtailed by fiat and brainwashing?

Find a workable definition of "value" and you are all set.

"Healthcare is totally not a value transference scheme pre-Obama."

I didn't say it was. There was a lot of it. But Obama definitely increased it.

Both public and private education are a value-transference scheme.

"All large organizations are dumb. And all sectors, public or private, usually have to deal with similar difficulties when it comes to market structure. I've worked at megacorps and for the government sector, I didn't notice a huge difference."

Even accepting this as true, it is not the *size* of the organization that determines whether it is value-creating or value-transferring, but *what it does*. There are both large and small value-creating and value-transferring private corporations. However, ALL governmental organizations transfer value, regardless of what they do. In some cases this is necessary, but we must never lose sight of this basic truth.

JP,

You couldn't have an NFL football game without referees to enforce the rules. So the referees and certainly creating value by performing a service that allows the game to happen. To the extent that government services allow markets to function by setting up and enforcing proper rules they are certainly value creating.

No, the government does not create value by establishing and enforcing rules. This is true even of the "pure" form of government that limits itself to being a referee. What such a "pure" form of government does is *prevent* (or at least, limit) value transference via fraud, violence, theft, embezzlement, or other criminal methods. This is not the same as creating value (in principle, you could have a government that was a neutral arbiter but nevertheless little or no economic value is created in the society). Moreover, it is important to remember that the mechanisms for enforcing the rules are always a cost (tax) imposed on those who actually create value.

Of course, right now we are so far beyond the point of "government is necessary to provide order and enforce contracts" that it's not even funny. Government today is a massive leech on the productive. The government not only transfers wealth to the unproductive in exchange for wealth, but tilts the playing field to favor politically connected cronies of those in power.

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