[phkahler]

Nope. One of the fudges is saying that a computer based on today's technology is more valuable than on from a couple years ago. I forget what this is called. But it's stupid and could be really abused to say a cellphone is a trillion dollar device, since that's what the processing power would have cost in 1980.

Maybe we should measure GDP via wages. Since all spending has to come from that anyway... not sure how to classify B2B transactions though, just thinking out loud.

[bryanlarsen]

An iPhone 12 uses less material than an iPhone 11 yet is more valuable than an iPhone 11.

A Tesla uses about 25 tons less fossil fuels than a gasoline car, even if its electricity is powered by a natgas generating station. The Tesla uses about the same amount of fossil fuels as the trucks transporting the fuel to the filling station.

Software of course, is special. New software is better than old software otherwise nobody would buy it. Yet the material usage is roughly equivalent at roughly $0.

These three types of progress can continue indefinitely.

[nradov]

You are referring to the hedonic quality adjustment factor that the BLS applies to CPI calculations. It's not at all stupid and it doesn't result in trillion dollar cellphones. You should really read up on the basics instead of making ignorant comments about things you don't understand.

https://www.bls.gov/cpi/quality-adjustment/questions-and-ans...

[inawarminister]

There were proposals for labor-backed currency, where the basic unit is one hourly work of the worker. So B2B transactions will be valued from the man-hours that went to it.

Of course this approach breaks when the gigantic corpocracies are able to bloat into larger and larger sizes. But it might be an interesting research topic.

[collegeburner]

There are a lot of reasons why this wouldn't work but fundamentally the LTV is an interesting toy but crap economics. Bottom line is utility to people does not depend on person hours involved in production.

Think about it this way: I can have somebody skilled or unskilled do a job. Assume that they make the same output but it takes unskilled 2x the time, let us say maybe producing some leathercraft. Their output is not worth 2x the skilled, it's the same thing. Now assume that they take the same time but the skilled produces an output of 2x quality, maybe they are cooking something and the skilled makes a dish 2x as good. Neither are they worth the same. It may actually be worth less because they produce it slower so consumer has to wait 2x as long.

[throwawaymaths]

It can even get worse. Fundamentally LTV is subject to a very dangerous question of "who gets to define what is labour"? Is sitting around playing video games labour? Well what if you're at a video games company? Is smearing feces on a canvas labour? What if it's a commissioned art piece? What if it's an uncomissioned art piece that the artist knows will fetch a price? What if the artist is a chimpanzee? Etc.

[bluGill]

Labor hours fails because some jobs need more incentive to get into. Why would I study in school when I could make just as much doing basic unskilled labor, with careful savings the unskilled laborer can retire earlier since he starts sooner (also likely doesn't have to pay off student debt)

[White_Wolf]

You'd have to implement a coeficient based on the average time needed to aquire said skill for a person with average IQ and EQ, performance, number of base skills required to learn said skill, so on. This formula would be a bit more complex than this but you get the jist of it.

It wouldn't be impossible to quantify it for all but edge cases.

[logicchains]

>It wouldn't be impossible to quantify it for all but edge cases.

It would be impossible to quantify it because there's no objective measure of value. The current system allows value to be quantified by people's revealed preferences: the jobs people are willing to pay more for get paid higher. If there's no market for labor then there's no revealed preferences and it's impossible to know which jobs are creating more value for people (only what jobs are creating more value by some bureaucrats personal subjective measure of value).

[White_Wolf]

Value is relative term. Even so it can be quantified by using "demand" of a final service/product. That can be used to increase the value of the hour for a certain vertical.

Even the same thing can be valued differently, depending on the location, circumstances, etc.

Tbh I'm not an economics specialist to account for all variables but I can't see how it would be any different from fiat in terms of complexity.

[SkyMarshal]

Except those edge cases would likely destroy the whole system. The value of an hour of labor isn’t based on the time it took to acquire the skill, it’s based on the value of the good or service produced to society. Whether it takes a normal person 4 years to acquire that skill, or a genius 4 days, the value is what it’s worth to other people.

That value not only has a very wide range, but also it’s constantly fluctuating. If you try to centrally dictate it, you’ll be constantly getting it wrong, distorting the labor market just as badly as artificially low interest rates distort other aspects of the economy.

[White_Wolf]

>The value of an hour of labor isn’t based on the time it took to acquire the skill, it’s based on the value of the good or service produced to society

I'd think, the reason that a surgeon is paid more than a garbage disposal person is the ammount of time, brain power and skill it takes to learn/master.

In the grand scheme of things, number wise, if the garbage disposal guys are gone (or just refuse to work for 1 year), a lot more people will be sick and die. In todays world, we can't do without them. Why would a surgeon be paid more if he only saves 10000 lives during his lifetime when cleaners keep millions safe from disease, rat infestations, etc? How about those guys that work at water purification plants that keep cities running and that surgeon clean?

I'm not bashing surgeons here. I'm one of the guys that made it through a poped apedix thanks to a surgeon that realized what was going on and did the surgery within 1h of me collapsing.

I'm questioning the concept of rewarding labour based on "value to society". IMHO, that works only for basic needs and services. Food, shelter, security, etc. Anything above that... not so much or at best, debatable.

[SkyMarshal]

Things like this have been tried throughout history and constantly failed. It was pretty much the running theme of 1800s and 1900s. As the other poster said, the only objective measure of value is what people will pay for it. Nothing centrally planned can handle the variance and fluctuations in the value of things.

There are some supply and demand dynamics to it, for example surgeons are less replaceable than garbage men due to 8+ years of education required, so they will have less supply relative to demand, driving up the cost of their services.

And time is a factor as well - usually when people need a surgeon the problem is urgent and immediate, as you mention about your own experience, so they’re willing to pay more.

Also in your example, you have to compare on a 1-to-1 basis. How many lives does 1 garbage collector save, vs 1 surgeon. And if all the garbage men quit, how quickly could they be replaced, vs same with all the surgeons?

[Infernal]

I think a lot of the sibling comments here misunderstand the concept of labor-backed money (rather than debt-backed money, which we have in the United States today).

First - currency is the physical note, coin, IOU, etc. Money is the concept.

With debt-backed money like the US dollar, the money is created by a private bank (the Federal Reserve) in exchange for US Treasury bonds - debt.

The currency supply is controlled by the US Treasury, but the money supply is controlled by the Federal Reserve.

Labor-backed money as I understand it, would be created by the Treasury in exchange for labor. The Treasury would control the supply of both money and currency. Crucially, to create money, labor must be performed. Similar to debt-based money, where debt is created by the government as the basis of money - in this case, labor would be "created" by the price (in new money) offered for it.

There is no need to have some centrally-planned, mandated valuation of a certain tradesman's time vs another trade or profession - the government puts out lots of contracts for bid today with no such mechanism in place, and it wouldn't need to change.