Comment by nerdsniper
8 days ago
This feels like a religious belief. Somehow everyone captures exactly the value they create - no more, and no less. Amazing how perfect every transaction must be to ensure this is always true.
8 days ago
This feels like a religious belief. Somehow everyone captures exactly the value they create - no more, and no less. Amazing how perfect every transaction must be to ensure this is always true.
Actually, in most economic models of markets, the producer does not capture 100% of the value it creates. The exception would be a pure monopoly where I can do pure price discrimination and charge everybody exactly as much as they would pay. That is pretty rare for obvious reasons. So I don't know why GP expects this to be true of ARM.
> Actually, in most economic models of markets, the producer does not capture 100% of the value it creates.
See airlines who create enormous value, but remain terrible businesses. I think it remains to be seen if the AI companies can really capture the value being created as well.
They must also believe that stock prices represent actual value. I guess they use a very limited definition of the word "value".
"Capturing the value you create" is a euphemistic way to describe pushing producer surplus towards 100% and consumer surplus to 0%, your ability to pull it off depends on your monopoly power, and it would be more honestly described as "value extraction" than as "capturing".
I think in this case semantics matter.
True about semantics. "Capturing", "Creating", and "Value" are all rather fuzzy.
But false about my meaning, which was precisely the opposite of "a euphemistic way to describe pushing producer surplus towards 100% and consumer surplus to 0%"
My original comment "They capture exactly the value they create" was my (failed) attempt to restate the basic premise of capitalism, that profits tend towards zero, using the words at play in this discussion.