Re:Groupon now worth less than the $6 billion Google offered.
by martinpannier on Tuesday June 05, 2012 @01:11AM
(#4067422)
The micro-level counter-examples you provide for macro-level mechanisms simply don't work.
If you consider your first example at a market level, people that are better compensated are more valuable—because they create more value (the discussion is—of course—not around one's value as a human being). The only reason for imperfection in this regard is market friction—which there is a lot of, in every market. But the market value tends very quickly towards the real value if the market is liquid enough.
In a liquid equity market (stock exchanges for example), the price of the stock you buy is its current value. However, you are making a bet on the future value gains of the company. Buying stock for its current value is investing; anything else is speculation.
The idea of "worth" or "value" precedes economics as a discipline. Vulgarized economics might offer really weird and ideological versions of them, but it can't demand that everyone stop using them as normal people do.
Anyone can think of instances where someone at their company performs better than someone else but is not well-compensated, relatively-speaking. But no one seriously thinks that someone is inherently more valuable just because they're paid more.
If you think about it, anytime you buy a stock or engage in a market transaction you're rejecting the idea that the price of something is its value. If you exchange money for a good, what you're saying is that that good has more value to you than the price you're paying. The person you're bargaining with thinks the converse. Or if you're purchasing an equity, what you're effectively saying is that you have some non-public knowledge that that equity has more value than what the market price suggests (if you buy equities on a different basis, you should probably stop and move to index funds).
In Groupon's case, its econo-speak "value" came about because everyone assumed that they could gamble and win on the theory that there's someone who's making the same assumption that they could gamble and win on the same theory as them but who is slightly less savvy. Just because a bunch of people are collectively changing their minds about how many idiots are out there who are slightly less savvy than them doesn't change the actual value Groupon ever had.