[czl]

> profit is the only thing that matters

Can an activity be sustainable without involving profit or depending on profitable activities? Please share examples.

When transactions are informed and voluntary and there is profit in a competitive market that is wealth created. The key is to have these conditions and many real economies struggle with this because the payback for corruption and monopoly is high.

[ndriscoll]

Obviously yes. For example a nonprofit municipal communication network that people use for direct video calling with their loved ones, or that a public university uses to distribute free lecture courses.

A great deal of computerized products/services are today intentionally made to require constant upkeep so that they can produce an ongoing revenue stream when when no real work is needed. That's obviously not economically ideal, and their revenue is in some sense a measure of drag.

Consider for example music streaming. At 3 minutes per song and using 128 kbps Opus, you could have your favorite 100,000 tracks stored on your phone for about $15 worth of flash storage. From that perspective, Spotify revenue seems like an absurd thing to include as a measure of "progress", particularly if you mostly listen to music from 30+ years ago, which of course is not being made anymore.

[czl]

You mentioned a public university as an example, but it's important to note that such institutions rely on funding from fees, taxes, and donations. Taxes are generated from profitable activities, donations often come from the surplus income of profitable entities, and fees are paid from income earned through profitable endeavors. Thus, wealth creation, measured by profit, is essential for spending.

Non-profit organizations, on the other hand, depend on donations or service payments for their revenue. While they do not declare a "profit" at tax time, any surplus they generate is typically reinvested in their operations or distributed to employees or members. Therefore, while they don't show a profit for tax purposes, they do generate surplus funds (aka profits) or depend on for funds from other activities that do.

[ndriscoll]

The point is profit is not a measure of wealth creation. It's neither necessary nor sufficient to create wealth.

My university recorded a bunch of lectures for remote students a decade ago when I was there. They could release them to the public (in fact, while I was there, anyone could go view them for free in person in the library) at essentially no cost, creating a large amount of wealth but no profit. But they haven't and likely won't.

In 2020, the government artificially tanked interest rates, causing asset holders (e.g. homeowners) to profit greatly without creating any wealth.

Anyway, the other poster's point was that profit generating activity is not the only activity or the most important activity. And in this very moment you and I are doing that with our discussion. There are other benefits to having a good communication network, and it makes sense to measure the coverage and capacity of the network, not the amount of money people make using it, which is just one small part of its use.

[czl]

> The point is profit is not a measure of wealth creation. It's neither necessary nor sufficient to create wealth.

Profit is the difference between the cost of some activity vs the benefit of that activity. How else can you measure wealth creation?

> My university recorded a bunch of lectures for remote students a decade ago when I was there. They could release them to the public (in fact, while I was there, anyone could go view them for free in person in the library) at essentially no cost, creating a large amount of wealth but no profit. But they haven't and likely won't.

Have you considered that the university may fear getting sued?

https://news.ycombinator.com/item?id=26136320

> In 2020, the government artificially tanked interest rates, causing asset holders (e.g. homeowners) to profit greatly without creating any wealth.

To explain why the above statement is nonsensical it would take a couple paragraphs but I expect most readers will not need that. It speaks for itself.

> profit generating activity is not the only activity or the most important activity.

To spend and benefit from wealth you have to create it and profit is a measure of wealth creation. How did you read my words and reach the conclusion that I think profit generating activity is “the only activity or the most important activity”?

> And in this very moment you and I are doing that with our discussion.

Yes, we are enjoying leisure time because of activities that generated surplus wealth (including knowledge) by millions / billions of individuals now and in history. Without surplus wealth our lives might be more like those of our relatives in the animal kingdom.

[ndriscoll]

If getting into the weeds, I don't think you can accurately measure wealth creation since any reasonable definition of "wealth" is going to be dependent on utility metrics that vary from person to person. Whether an action net creates or destroys wealth is not even going to be consistent.

Profit, as in dollars in minus dollars out, is much easier to calculate, but only tangentially relates to wealth.

Whether a regulation may prevent it doesn't change the fact that they could generate massive wealth with no one profiting or incurring a loss by distributing it. For the purposes of the thought experiment, assume it already had captions for the remote students for whom it was recorded.

What do you think is nonsensical? That the government (or the Fed under the direction of the government) intentionally pushed down interest rates with a policy of QE? That lowering rates increased the price of existing assets, generating a profit for the owners? Or that this was just inflation, not wealth creation?

In any case, when rates dropped, first thing I did was buy a house, which almost immediately went up by 30% (based on comps). So apparently the reasoning at least had some predictive power. I also made some large stock gains going 100% into the market, but was too timid to use margin to multiply that.

The original comment that you quoted and responded to was criticizing the article for implying that profit generating activity is all that matters (and hence the metric to measure instead of e.g. network deployment), ignoring non-profit activity which is arguably more important.

[czl]

> any reasonable definition of "wealth" is going to be dependent on utility metrics that vary from person to person

Yes any reasonable definition of "wealth" will depend on utility metrics that vary from person to person. Despite these differences there is ample evidence that societies are able to measure wealth just fine using conventional currency units such as dollars, shekels, euros, ... These units can be exchanged back for things that depend on utility metrics that vary from person to person. It is these utility differences that drive the modern economy. If two parties have the same value for a good or service why would they transact with each other? Always there must a difference in value for a voluntary transaction to happen.

>That the government (or the Fed under the direction of the government) intentionally pushed down interest rates with a policy of QE? That lowering rates increased the price of existing assets, generating a profit for the owners? Or that this was just inflation, not wealth creation?

By design currencies lose value and they are meant for short term holding. When a ruler shirks all the measurements using that ruler are larger was there wealth created? Obviously not. Wealth is "stuff": factories, power plants, roads, cars, houses, farms, ... The amount of currency may double and prices of everything double but wealth can be unchanged.

> In any case, when rates dropped, first thing I did was buy a house, which almost immediately went up by 30% (based on comps). So apparently the reasoning at least had some predictive power.

A lotto winner shares their "system" with you, do you believe "its predictive power"? So let's consider your logic: When zoning restrictions or lots of immigration causes a housing shortage so a few houses sell for double the price does that mean the wealth in all houses has doubled? What do you think will happen to cost of housing if populations decline? Are populations due to decline anywhere? What happened to price of oil when there was too much of it during COVID?

> I also made some large stock gains going 100% into the market, but was too timid to use margin to multiply that.

So next time maybe you and certainly others like you will be tempted to use leverage causing valuations to climb ever higher pulling in others to do the same thing and how do you think this will end when the price bubble pops? Do you think price bubbles create wealth? They create the illusion of wealth because people think the paper wealth is wealth but paper wealth is not wealth. When Telsa stock price doubles in a day it is unlikely that the amount of Tesla stuff has doubled in a day. What happened is a few shareholders changed how they feel about Tesla and stock prices represent those feelings rather than wealth. This is true about all bubbles including housing.

> Profit, as in dollars in minus dollars out, is much easier to calculate, but only tangentially relates to wealth.

Surplus value can also be measured in heads of cattle, pork bellies, bushels of wheat, gallons of oil, units of energy, hours of labor, ... all of which convert to universal currency units based on supply / demand for these goods.

> The original comment that you quoted and responded to was criticizing the article for implying that profit generating activity is all that matters (and hence the metric to measure instead of e.g. network deployment), ignoring non-profit activity which is arguably more important.

Yes, I asked "Can an activity be sustainable without involving profit or depending on profitable activities? Please share examples."

Notice so far I have yet to get any examples.

I also said that "When transactions are informed and voluntary and there is profit in a competitive market that is wealth created."

So what is the purpose of those who deploy communications networks? Create wealth? Spend wealth? If spending wealth is the purpose then profits do not matter. If wealth creation is the purpose, how else to judge success if not by whether the benefit is more than costs (aka there is a profit)? Why do it otherwise?

[sofixa]

> Can an activity be sustainable without involving profit or depending on profitable activities? Please share examples

Any sort of public infrastructure such as electric grid, railways, internet, water supply and treatment, roads, libraries, educational institutions.

[czl]

If public infrastructure is not paid for by taxes on profitable activities how can it be sustainable?

[ndriscoll]

Mandatory civil service would be one example (in some sense taxes are just an abstract version of this).

[czl]

“Mandatory service” is not sustainable else you would still see slavery around. “Mandatory civil service” does not depend on a government funded by taxes? Somewhere a surplus (aka profit) must be generated else what is there to tax.

[ndriscoll]

Like I said, taxes are essentially an abstraction over mandatory service. Currently, 3 months out of each year, my work belongs to the government. They also don't care whether I have the "profit" to pay them; if I can't pay my living expenses after paying my taxes, that's my problem to figure out. The taxes are due regardless. That aside, I don't know why you'd characterize it as "unsustainable". There are countries with mandatory military service today and they're doing fine. Slavery is perfectly sustainable; it existed across the globe for thousands of years. There are reasons it's not great, but sustainability isn't one.

[czl]

> Currently, 3 months out of each year, my work belongs to the government. They also don't care whether I have the "profit" to pay them;... The taxes are due regardless.

In Western countries tax due depends on there being some surplus to tax and if there is insufficient surplus there is no tax and you may qualify for government benefits instead. Taxes paid can only be earned sustainably from activities that generate a surplus. How else could it be?

> There are countries with mandatory military service today and they're doing fine.

How many of these countries have governments that do not depend on taxes? If the government depend on taxes and military service depends on government then military service depends on taxes as well does it not? And if military service depends on taxes it also depends on the surplus that these taxes are collected from else how can military service be sustainable? Solider need food, housing, etc some surplus generating activity must pay for that. It used to be an army would pay for itself by looting etc but clearly that is not sustainable.

> Slavery is perfectly sustainable; it existed across the globe for thousands of years. There are reasons it's not great, but sustainability isn't one.

Societies that use slavery have difficulty competing with ones that do not. If the use of slavery was sustainable why did slave using societies not have the geopolitical power to keep doing it? You think slave owners gave up their slaves from goodness of their hearts?