Comment by fhd2

3 days ago

Agreed. If you "create demand", it usually just means people are spending on the thing you provide, and consequently less on something else. Ultimately it goes back to a few basic needs, something like Maslow's hierarchy of needs.

And then there's followup needs, such as "if I need to get somewhere to have a social life, I have a need for transportation following from that". A long chain of such follow-up needs gives us agile consultants and what not, but one can usually follow it back to the source need by following the money.

Startup folks like to highlight how they "create value", they added something to the world that wasn't there before and they get to collect the cash for it.

But assuming that population growth will eventually stagnate, I find it hard to not ultimately see it all as a zero sum game. Limited people with limited time and money, that's limited demand. What companies ultimately do, is fight for each other for that. And when the winners emerge and the dust settles, supply can go down to meet the demand.

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fhd2

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vinibrito  3 days ago

It's not a zero sum game. Think, an agronomist visits a farm, instructs to cut a certain plant for the animals to eat at a certain height instead of whenever, the plant then provides more food for the animals to eat exclusively due to that, no other input in the system, now the animals are cheaper to feed, so more profit to the farmer and cheaper food to people.

How would this be zero sum?

  • fhd2  2 days ago

    It would be if demand was limited. Let's assume the people already have enough food, and the population is not growing - that was my premise. Through innovation, one farmer can grow more than all the others.

    Since there already was enough food, the market is saturated, so it would effectively reduce the price of all food. This would change the ratio so that the farmer who grows more gets more money in total, and every other farmer gets a bit less.

    As long as there is any sort of growth involved - more people, more appetite, whatever, it would be value creation. But without growth, it's not.

    At least not in the economical sense. Saving resources and effort that goes into producing things is great for society, on paper. But with the economic system that got us this far, we have no real mechanism for distributing the gains. So we get over supplying producers fighting over limited demand.

    The world is several orders of magnitude more complex than that example, of course. But that's the basic idea.

    That said, I'm not exactly an economist, and considering it's a bleak opinion to hold, I'd like to learn something based on which I could change it.