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How can we tell if transactions "provide value"?
The assumption from an Austrian economics standpoint is that any voluntary transaction is value-providing because each party believes the trade will satisfy some subjective need or want. So for example, OnlyFans is a value-providing transaction because both parties do what they do willingly and do so in the belief that they will get value.
Yet practically speaking, there's something weird about this. There are lots of voluntary transactions that don't provide value, perhaps significantly subtract value. Gambling, for example or other addictions (drugs, porn, etc) where one party is making a lot of money from the addicted person does not seem value-adding at all. How do we account for this? Is there some hidden fraud in these transactions? Or can we add some other principle by which we can tell if a transaction is value-providing?
The first thing to notice about these transactions is that they have high time preference behavior around them. There's at least one party that's being especially impulsive. A lot of mobile games, for example, rely on addictive, impulsive behavior to make money and they have more of the sucker-swindler relationship. The dynamic shares much more with rent-seeking or fraud than, say, someone paying for an Uber ride.
Yet the libertarian norm is considering anything voluntary to be value-adding. But is trading of fentanyl by an addict and dealer really a value-providing transaction? Common sense says no, yet subjectively, both parties wanted to do the transaction, so what's the problem? Is subjective evaluation of the benefits of trade enough to determine whether it's value-adding?
This is not an idle question. The British got a lot of resources from China by getting them addicted to opium. That would seem at some level nasty and unfair, that people were in some way tricked.
In other words, there has to be some expansion of the definition of fraud to align our definition of providing value to practical experience. Does selling drugs to an addict provide value? Subjective value says if it's done voluntarily it is. Can fraud be defined precisely enough that we can align our intuition that such trades don't provide value? This is the gap through which much evil is justified. We seek here to close that gap.
What's the character of these problematic trades? First, the person buying doesn't have self-control. There's little personal responsibility and the trade is made under some personal distress. Clearly, such buyers don't have low enough time preference and we could leave it at that, but it's unsatisfactory because these people are hurting themselves. Many such actions like that are clearly detrimental and value-subtracting. Suicide is clearly detrimental, for example, and is essentially a transaction with yourself.
And this is where we get a little more intuition about what's value-adding. The obviously bad transactions are done by people committing violence to themselves.
Please don't misunderstand where I'm going with this. I'm not using some concept of violence against ourselves as the justification for government tyranny, by saying that they are protecting you from yourself. I'm only saying that we should acknowledge that some people do commit violence to themselves and that this is not a good thing or a value-adding thing.
Should we be preventing people from committing violence to themselves? That's a much harder question, because doing so may infringe on their human rights. But you can condemn the people selling this stuff as if it's something good. They are committing fraud in how they present their goods and/or services.
Indeed, that's what's been happening. The people with the profit motive are getting angry, because they don't like other people interfering with their sales with moral condemnation which is really bad publicity. But this is the normal consequence of bad behavior. You get condemnation by third parties. That doesn't mean third parties should now suddenly be trusted, but we need more information in the market, not less.
Now, some behavior that is condemned by one group may not be considered bad by another. This is where we get some subjectiveness to morality. And this is where we also get a lot of righteous indignation. But there is another dimension, particularly of violence to yourself that need explaining. Not everything voluntary provides value.
1426 sats \ 5 replies \ @siggy47 30 Jan
The person voluntarily engaging in the transaction decides if it has value, financial or otherwise. Period.
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Any non-coercive transaction is done with an expectation of profit.
I'm reading Knut Svanholm's Praxeology, and one thing I've learned from it so far: Profit is not only monetary, it can be things you can't put a monetary value on, like love, family, friendship, happiness, joy etc.
For someone shooting up heroin, the (however temporary) easing of suffering it brings them is a profit, and it doesn't matter that someone else (e.g. someone with a lower time preference) would view it as harm. Similarly, someone committing suicide does it for profit.
IMO people have the right to seek profit and anyone trying to stop them is a tyrant.
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10 sats \ 1 reply \ @siggy47 31 Jan
My response was shorter and more visceral, but I find it interesting that the word tyranny kept popping into my brain as I was reading the post.
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I tend to have strong opinions, but one thing I find fascinating about praxeology is that it doesn't judge, it just studies why people act the way they do. As soon as a judgement or opinion is pushed, it ceases to be science.
However, it does attract libertarians. I think that's because it reveals facts in a cold, logical, objective way; facts tyrants love to hide - by appealing to emotions, propaganda etc. Once the facts are revealed, people can see things in a different light and form their own, better informed opinions, regardless of where they stand emotionally.
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Period
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Taking a step back, I read this statement as, "it is objectively true that value is subjectively defined."
I can imagine a world view in which there is only subjective value. In this case, the universe is happenstance and we only have the illusion of value (maybe kind of like Sartre). However, there's no "Period" at the end of this statement, because without any actual intrinsic value at all, even instrumental value is an illusion. I can also imagine a world view in which all values are objectively true. This is maybe what is alluded to in the last paragraph. It is predicated on the belief of something outside our universe by which we're all dependent. The article argues that most values are subjective as determined by the market, but others might be part of that second category. However, the idea purported here is elusive to me. Am I missing something that makes objective inclusion of the "Period" make more sense?
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Very fine rhetoric here with excellent questions to ponder.
Should we be preventing people from committing violence to themselves?
The short answer is no, because it is impossible.
Philosophically, as one who overcame addiction (I consider myself a veteran of the Crack War as I had a 8 year run ending in 1994), I say no resoundingly. I am a libertarian. I believe free people have the agency and right to harm themselves. Most of the time I harmed no one but myself. However, in the end this was no longer true and the law handled that like it should have. Now if I had a child at the time, I would have hurt him with my selfish behavior and that is another thing.
Fine lines here.
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this is a good philosophical question.
the amount of psychological manipulation over the years is indeed astounding, and i'd say most people aren't truly aware of this manipulation, especially the more subtle methods. to that end, it's essentially impossible to ever get consent for a completely voluntary transaction. there will always be an element of manipulation, be it an exploitation of addiction or otherwise. both parties involved can truly have no idea of manipulation even being a part of their decision making process; that's how deep these machinations have gone.
i think the question becomes one of subjectivity towards what the definition of "value" is. someone with purely self-interested motives would view anything gained in their favor as having value, regardless of the repercussions for everyone else involved with that transaction. on a macro level, that's a destructive mentality, but for that one individual, it's a construction mentality.
this rambling of mine might not have added any value to this overall discussion. but essentially, the best we can do is voice our opinions, and condemn "destructive" actions and patterns of others, with (most importantly) a reasoned explanation for the thought process on how we got there.
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Value definitely added. Younger points for participation! 😁 Just kidding.
If we leave things to the rationalizations of individuals, then subjectivity becomes a major issue, right?
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418 sats \ 1 reply \ @kepford 30 Jan
I think @siggy47 nailed it. The individuals involved in any transaction determine the value for them at that place and time. But they cannot determine the value for others. If you take morals out of this this remains true. For transactions the ONLY objective view is that the two or more parties determine the value for themselves. This is not objective value for everyone. They may not even agree with their value determinations over time. I know that is true for me.
In an economic sense there isn't a moral perspective IMO. Economics are amoral. It is a frame to understand human actions. And a transaction is a single data point. What one person may value may be destructive to them. Their value judgement could be off. Its a single data point and it is their subjective value judgement. Not an absolute moral decision for all humans through time.
When we start talking about moral values we enter into another realm. I've read "Thank God for Bitcoin. I really enjoyed it btw. @jimmysong I know you profess to be a Christian so I suspect you will agree with me that from our perspective God, the creator of everything is the ultimate decider of value. Not one person has His view on our transactions. He gave us His word to show us the way. All we can do is seek to follow His guide. Seek to see things as He sees them. How does He value the many transactions that I am a part of? Ultimately that is what matters. I'm just thankful that He values us. From my perspective that doesn't even make sense.
I believe it is a trap to focus on the decisions and value judgements of others. We must first focus on our own value judgements. Seek to remove the log from our own eye before trying to help others with the speck in their eye. That doesn't mean we never talk about things like this just that it is easy to get focus outwardly vs. upwardly.
Clearly there are many transactions that do not provide value from my own view and surely from God's perspective. But what then? In the end I have landed on this. I cannot determine the objective value of anything on my own. I can probably get close, but I should focus on what is in my control over what is not. I value bitcoin far above the current market price on any day. I'm only one data point. Important to keep our opinions in context of our human fallibility and limited knowledge. This is why I so often repeat @ODELL with "Stay humble". I need to be reminded daily.
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One more way to look at this.
Value is subjective. At least from our human perspective.
It doesn't matter how hard I work to write some code. How good that code is. How error free it is if it is not needed. I could build the most perfect app every built but if no one values what it does I will never make a dime of money on it.
Why? Because each person determines the value of things for themselves. And... this value can change based on mood, culture, morals, etc. I value SN far more than some people and far less than others. This post is a good thought provoking topic but to me the Libertarian's get it right on the macro level. The personal level is just that. Personal.
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64 sats \ 0 replies \ @kr 30 Jan
The first thing to notice about these transactions is that they have high time preference behavior around them. There's at least one party that's being especially impulsive
how do you determine when a transaction involves high time preference behavior?
i get the extreme examples of gambling, but i suspect the economy can be broken down into a whole spectrum of transactions that exist along a time preference continuum.
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the idea is to shun and call out the people tricking others into doing stupid things?
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10 sats \ 0 replies \ @398ja 30 Jan
While reading, I had the impression you are trying to use a moral argument to counter the Austrians' purely economic argument. This, to me, seems to explain why you are coming to different conclusions. I thunk the Austrians' position is correct because people have free will.
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Yet practically speaking, there's something weird about this. There are lots of voluntary transactions that don't provide value, perhaps significantly subtract value. Gambling, for example or other addictions (drugs, porn, etc) where one party is making a lot of money from the addicted person does not seem value-adding at all.
The value is freedom. And you can't put a price on freedom.
So I fully agree with @siggy47 here:
The person voluntarily engaging in the transaction decides if it has value, financial or otherwise. Period.
Sometimes, it's really just that simple. No need to make it complicated.
But is trading of fentanyl by an addict and dealer really a value-providing transaction?
It is, depending on how you define value. If it's subjective (which I think it is), it's value for both parties and if you want to add society to that equation, you also need to think about opportunity costs. What if that transaction does not happen? Will the problems of addiction magically go away? According to my experience, that's not the case.
I think you're letting your own personal biases show too much in this post here. Imo, drugs aren't the problem but just a symptom of the conditions in which humans find themselves. So the situation is the problem, not necessarily the drug.
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