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April 18, 2015

Fundamental Concepts – Value [Weirddave]

So here's my fun life. I'm trying to deprogram a kid who spent the past three years embedded in the SJW/Proggy subculture. I see lots of you who sent your kids away to college nodding your heads. Well, it wasn't college in my case, but the results are the same. One of the hardest concepts to reintroduce is value, because it is so routinely dismissed and denied by leftists worldviews. Lets start with the most basic concept:


“X” is worth exactly what someone will pay for it.

That's it, really, there is nothing else to say. Goooodnight every body!

No, really, that should be all there is to say, but so many people make it a career of denying this one simple truth that entire industries have arisen to support the denial. Unions, to name just one obvious culprit. Minimum wage laws, to name another. Human beings just seem to be hardwired to deny the obvious.

Lets start with an example: My car. I just went and used the Kelly Blue Book website to calculate the “value” of my car. It came back with a figure: $10,431. That's it, the definitive word for a private sale from a recognized expert source: My car is worth $10,431 (which is depressing because I owe more than that on the loan, but that's another story). But is it?

Well, I went to Craigslist, and looked for the same make, model and year. There's a lot of results, and it's not nearly as specific as KBB (KBB lets you control for options, condition, etc.., Craigslist just lists everything), but a quick rough estimate off the top of my head shows my car listing for an average of $13,000. Brilliant! My car is worth $2500 more than it's worth!

Wait, what?

And that's the crux of it. KBB is a respected, honest, earnest company with decades of experience behind it. I absolutely believe that they are giving their best, expert estimate as to what I could get for my car, but right this second cars just like mine are listing for $2500 more. So what is my car worth? $10, 431 or $13,000?

The answer is neither.

My car is worth whatever I can get for it if I decided to sell it. It might start as a $10,431 car, but because it's stick shift, which is rare, someone who likes driving manual would give me more than that. It might start at $13,000, but because of that goddamn dent in the passenger side below the back door that doesn't effect anything but it's ugly ( a plow threw a parking block into a snowdrift and I didn't see it. In case you haven't guessed, this sequence of events still pisses me off ) nobody will give me more than $12,350. What's it worth? I don't know, and I won't know until I try to sell it.

Here's another completely made up example. Let us postulate a house. This house:

detroit-house.jpg

Now that house is in Detroit, and it's definitely a handyman special, a real fixer-upper. What's it worth? In this world, nothing most likely. Really, would you pay anything for THAT? In Detroit of all places? Probably not.

But now lets add a twist. That particular home was the childhood home of Daddy Warbucks, who is richer than hell and dying fast from aggressive pancreatic cancer. Daddy Warbucks has come to realize the error of his evil capitalist ways, and wishes to live out the last week of his life as he lived in a simpler time. Money is no object and time of the essence. He'll pay $10,000,000 to die in his childhood bedroom.

So what is the house worth? Last week, it was worth nothing. Next week, it'll be worth nothing. Right now, it's worth TEN MILLION DOLLARS!

My advice is sell quick.

What's changed? It's important to realize that the house didn't change, Detroit didn't change. Nothing changed except that one old man suddenly decided to spend everything to be comfortable in his last days, and that changed the market. As soon as he died it changed back. The entire time, the house was worth what someone would spend for it. That didn't change. The number did.

How does this apply to labor?

Exactly the same way. Labor is a commodity. People who need things done will pay for that commodity. How much they will pay depends on how badly they want a certain task done. My older son, Big, just can't seem to get this concept through his big, fat, melon head. Big is looking for a job. He keeps texting me leftist bullshit to justify his frustration. You ever attempt to educate someone on economics through text? Don't. It's not fun.

Here's a perfect example of what I'm talking about:

Big: ”Without minimum wage laws, employers would pay their employees the minimum they could get away with!”

Me: “The minimum they can get away with is exactly what they are worth!”
*Big and I stare at each other with perfect mutual filial loathing * (metaphorically speaking, this was via text)

Hmmmm. Jonah Goldberg's couch just phoned me and told me two thing. #1, shame on me for stealing his bit, and #2, wrap it up, I'm meandering.

Look, it really is as simple as I said way back at the beginning. Anything: good, labor, service, all it's worth is what someone else will pay for it. If you want your good, labor or service to be worth more, then it's up to you to make it worth more. That's a fact of human existence as immutable as gravity is in the physical world. Any philosophy, political or sociological, that denies that simple truth is destined to fail, utterly and catastrophically. I'd suggest using that as a yardstick. You can do what you want, but as for me, my minimum requirement for decision making is reality. Cold, hard, uncompromising reality. It doesn't make me “feel” good very often, but dealing with what IS rather than what my feels say should be in a rainbows and unicorns world has paid great dividends IRL. I just wish I could get Big to realize this. Do you think I could smack him on the head with an axe? You should be able to smack kids on the head with an axe, shouldn't you? It didn't used to be against the law, did it? Seriously, that's the solution. Smacking kids on the head with an axe used to be illegal, and that was good until I personally turned about 30, because dad would have had a field day with me, but now that law is bad because it precludes me from smacking Big over the head with an axe, right?

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posted by Open Blogger at 10:30 AM

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