In a beautiful, rollicking piece last month for Aeon Magazine, web developer James Somers ponders the question, Are coders worth it? The piece is a thinking man's struggle to understand the value of…
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\#HackerNews #2013 #byproduct
In a beautiful, rollicking piece last month for Aeon Magazine, web developer James Somers ponders the question, Are coders worth it?
The piece is a thinking manʼs struggle to understand the value of his profession. By Somersʼ own reckoning, his accounts are out of balance. Heʼs paid handsomely, but the work is trivial. As he says:Most of what we’re doing, in fact, is putting boxes on a page.... We fill our days with the humdrum upkeep of these boxes: we change the colours; we add a link to let you edit some text; we track how far you scroll down the page.... Web development is more like plumbing than any of us, perched in front of two slick monitors, would care to admit.
Somersʼ anguish is palpable, and his catalogue of self-effacing remarks reads like an apology. He heaps criticism on himself, his job, and his entire profession. "Web start-up companies are like play-companies," he laments. Their products are "cheap, fun, and about as worldchanging as creating a new variation on beer pong."
"I just read the instruction manual," he says. "Thatʼs all there is to it."
What heʼs trying to atone for is taking too much (salary and perks) in exchange for too little (skill and effort). Society has overcompensated him, so heʼs left in its debt — hence the guilt.
I canʼt help admiring Somers for this. It strikes me as intellectually honest, to question oneself in this way. But I worry that his concerns are misplaced — that heʼs anguishing over a second-order problem when a first-order problem looms much larger.
He shouldnʼt feel uncomfortable about making money. He should feel uncomfortable about spending it.
A thought experiment — the Congolese Trading Window:
Suppose one day you wake up to find a large pile of Congolese francs heaped on your living room coffee table.
Thatʼs not all. You also find that your front door, previously a single slab of wood, is now divided horizontally into top and bottom halves (a so-called Dutch door). When you use the doorknob, both pieces move together, opening out onto your front porch as usual. But you can open just the top half, separately, like a window. And when you do, it pushes open to reveal the unfamiliar sights and sounds of a Congolese outdoor market.
Before you have time to object to this strange new reality, a man approaches your window. Heʼs carrying a sack of grain over his shoulder and calling out to you. Luckily you speak enough French to understand him. Heʼs asking if youʼd like to buy his grain for 500 francs.
What should you do?
Please ignore the contrived setup. The point is this: you have a chance to participate in the Congolese economy from the safety of your living room.
Assume you can only pass two things through the window — francs and sacks of grain. Knowing that the Congo is one of the poorest countries on the planet, what strategy will you pursue in order to do the most good for their society?
There are a surprising number of options. For one, you could simply hand the pile of cash out to the first person who comes by your window. Or you might hand small amounts of cash to a bunch of different people. Both of these seem like nice things to do. But then you wonder: what if the cash in your living room is counterfeit? More to the point — does it even matter? Wherever the money came from, if you dump it through the window, youʼll be helping a few people, but at the same time causing inflation that will hurt everyone else. All things considered, it might be best simply to burn the currency and nail the window shut.
Then you imagine using the francs to buy and sell grain, and here your options get much more interesting. You could speculate, for example, hoping to buy when grain is cheap and sell when itʼs dear. Or you might try to become a market-maker, by offering to buy and sell grain at a small spread. Or you could act as a bank, holding grain for your clients and giving it back when they need it later. You might even loan out some of your grain deposits, taking your cue from fractional-reserve banking.
You desperately want to help these people, but youʼre worried there are hidden hazards in these strategies. "Speculation," "market-making," and "banking" are painfully abstract, tainted with all manner of unsavory (capitalist!) connotations. You begin to wish youʼd paid more attention in your econ classes.
Because itʼs relatively simple, you decide to focus on the speculation strategy. Your plan is to buy grain whenever you think the price is poised to go up in the near future, and sell whenever you think the price is poised to go down.
Pretty simple. But are you actually helping these people?
Itʼs reassuring that no one is forced to do business with you. Whomever you trade with enters freely into the exchange, presumably because itʼs to his benefit. So you can relax in knowing that at least youʼre not screwing anyone directly.
But then youʼre struck with an uncomfortable realization: If you do your job well, youʼll start to make money. In fact, the better you are at speculating, the more money youʼll make. That money was hard-earned by each of the people with whom you traded. Any one of them would give his right arm for the amount of cash youʼre currently hoarding in your living room.
You begin to wonder if you should feel guilty taking all this money from the poor Congolese — who are now (you must conclude) even poorer as a result.
Wait, letʼs slow down and think this through. Emotions canʼt always be taken at face value, and in this case, your guilt is about to mislead you to a very dangerous conclusion.
What your guilt has failed to appreciate is that some things (like food) have intrinsic worth, while others (like money) are mere placeholders. This distinction might seem pedantic, but itʼs actually very important.
Suppose a genie offers to tweak the world in one of two ways. Either he will (A) double everyoneʼs bank account, or (B) double the amount of food in existence. Which is better for society? Clearly the answer is B, doubling the food. Option A (doubling the money) merely creates more placeholders, more tokens — while option B creates more objects of intrinsic value. In other words, A is a zero-sum change, while B is positive-sum.
The point is, money doesnʼt have intrinsic value. You canʼt eat money or use it to plow a field, nor can money babysit your children. Itʼs just a token weʼve all agreed to accept in exchange for giving up things that do have intrinsic value. In most transactions, money and intrinsic value flow in opposite directions.
When it comes to the pile of francs sitting in your living room, this makes all the difference. Those francs donʼt represent value youʼve extracted from the Congolese economy. Just the opposite: they represent value youʼve delivered to it, through your window.
Think about that for a second. If you feel guilty for making money, your moral compass is pointing in exactly the wrong direction — 180-degrees from what is right. Earnings are a measure of the good done for other people, not evils done against them.
Perhaps youʼre still uncomfortable — worried that weʼre engaging in sophistry. If so, we can take a closer look at some of these grain trades, to make sure weʼre doing the right thing.
Imagine a particular bag of grain that you bought at T1 for 200 francs, and then sold a month later, at T2, for 800 francs. What changed in this interval was the relative scarcity of grain. At T1 the grain was abundant (and therefore cheap), but at T2 it had become scarce (and therefore expensive).
What happened is that you effectively time-shifted the grain.
You moved the grain from a time (T1) when the Congolese people didnʼt need it, due to a relative surplus, to a time (T2) when they very much needed it, due to a relative shortage.
And yes, youʼre compensated for providing this service. But the money doesnʼt represent what youʼve weaseled from the economy, but rather the intrinsic value you added to it.
Oddly enough, the converse is also true. The more money you lose while speculating, the more value youʼre taking away from the economy. When you buy high and sell low, youʼre time-shifting grain in the wrong direction, taking it away from the economy when itʼs more valuable and returning it when itʼs less valuable.
In general, though, we donʼt need to track individual bags of grain. We can just track the money, and infer that intrinsic value is flowing in the opposite direction.
Now the Congolese Trading Window isnʼt just a thought experiment. Itʼs a metaphor — a way of re-framing our everyday economic lives.
Instead of a living room filled with grain and francs, we have ʼownershipʼ over many different types of assets. Instead of the Congo, we interact with our own societies. And although we donʼt do our buying and selling through a single window, the effect is the same: goods and currency move back and forth across the ownership boundary, between "mine" and "belonging to others in society."
So the same principle that held in the Congolese Trading Window holds for each of us: We earn money by providing value to other people. And consequently,The money youʼve earned represents value youʼve contributed to society.
This holds across almost every asset class and profit-making strategy in the modern world.
Consider the farmer. He sells food for money. His profits reflect the fact that heʼs creating value and giving it to society.
Consider the restaurateur. Whenever she pays money (e.g. for raw ingredients, labor, utilities, etc.) sheʼs paying to take things of intrinsic value from society and use them for her own purposes. Whenever she earns money, i.e. from customers, itʼs in exchange for giving them something of intrinsic value (a nice meal). Hopefully she makes a profit — the difference between money in and money out, between value created and value destroyed.
Or consider the private equity shop. When they buy a company, change its management and strategy, and then re-sell it for a profit, itʼs because they turned it into a more efficient machine. But if they re-sell it at a loss, itʼs because they took something of value and returned it (to society) in a worse condition than when they found it.
In these and most other cases, profit reflects the amount of value created and given to society.
What is wrong with us that we fail to celebrate this?
Maybe celebration is a tall order, but we hardly even acknowledge it. Itʼs true that we often respect great entrepreneurs like Bill Gates, Steve Jobs, or Elon Musk — but we respect them in spite of the money theyʼve earned. The money itself still feels dirty to us, like some kind of toxic byproduct of the value-creating process.
Maybe thatʼs because it is toxic.
Imagine if, after years of speculating in the Congolese grain market and accumulating millions of francs, you decide to cash out with one final act of buying a yacht through your window (then nailing it shut). Nevermind the logistics of passing a yacht into your living room. The point is itʼs an incredibly selfish act, and almost perfectly cancels out all the good you did through speculation.
The yacht is made of wood, metal, and plastic. Building it requires many thousands of hours of effort. Workers have to find the trees, cut them down, haul the lumber across vast distances, cut it, sand it, polish it, paint it, etc., etc., etc. If you werenʼt commissioning the yacht, all of those materials and man-hours could be put to other, better uses. For all the good it does the Congolese people, you may as well pay them to build the yacht, then burn it before their eyes. Taking it through the window, into your own possession and for your own consumption, has the same effect.
The point is, money spent on consumption is toxic — value-destroying. This is true even in our daily lives, without the literal magic window. Every time we spend money on a yacht or an iPhone or a nice jacket or even food, weʼre taking something of value from society and using it for our own purposes.
Thatʼs why wealth is toxic. As long as someoneʼs money is tucked away in his bank account, weʼre safe. But the minute it starts to leak out, via consumption, we all become that much worse off.
This, then, is the first-order approximation of the moral impact of economic activity:Earning money (via production) is good for others. Spending it (via consumption) is bad.
Donʼt get me wrong — this is far from the full picture. There are a ton of second-order corrections we need to make. Weʼd want to inquire how the money was earned, for example. If itʼs earned in free, honest, competitive transactions, itʼs going to be a better measure of value-added than if itʼs earned coercively, dishonestly, or in stifled markets. If itʼs earned in positive-sum games (like farming), itʼs going to be a better measure of value than if itʼs earned in zero- or negative-sum games (like spamming).
On the spending side, we need to account for whether the goods weʼre consuming are rivalrous or non-rivalrous, as well as all the externalities from consumption, both positive and negative. If no one consumed anything above basic subsistence, weʼd have a lot less economic growth, fewer innovations, and inferior technology (including medical technology).
The point isnʼt to use the size of oneʼs bank account as a measure of moral worth. Such a measure breaks down in a ton of ways. It ignores all the good things people do that arenʼt rewarded with money. It ignores the huge element of luck. It ignores peopleʼs intentions, if those matter to you — Scrooge wasnʼt trying to be pro-social in accumulating his fortune.
Instead, the point is that earning money is, in general, something to celebrate, not feel guilty about.
Maybe James Somers is right: maybe web development is overhyped at the moment. A different profession might allow him to do more valuable work. And to be honest, I applaud his line of questioning. Plenty of industries (advertising, high-frequency trading, for-profit higher education) would do well to question themselves in this way, to understand if they are positive-sum, zero-sum, or even negative-sum enterprises.
But as long as weʼre soul-searching, letʼs not forget to examine our spending habits as well.
Originally published August 26, 2013.
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