Re:Larry Page: I’d Rather Leave My Billions to Elon Musk Tha...
by Noxchi on Thursday March 20, 2014 @04:42PM
(#7438593)
Think of life and humans as a chemical reaction, like fire.
We consume and process things to make other things.
A tree by itself has limited value to a human, but if you process it into a house, it has a lot more value to a human.
Lets say you need 100 trees to make a house. 100 trees is worth $10,000.
A person with the job of chopping trees (a lumberjack) can cut down 300 a year, so they make $30,000 a year in income.
Lets say the lumberjack wants to buy a house.
A house is worth $20,000 to him. He pays a firm to build him a house for $20,000. The firm buys 100 trees from someone for $10,000 and then turns them into a house for the lumberjack. That extra $10,000 they received is called "value add". They added value because humans (the employees of the firm) had to turn the wood into a house.
This is what the economy basically is, and you can be in two roles:
1: The resource extractor
2: The resource processor
Or in other words, you can be the wood or the flame.
How to do you make a big fire?
Get more and better resources (like wood and air)
Start fires in more places than one (parallel processing of the wood)
Start hotter fires (blowtorch vs a match)
Pretty much all of the above is controlled by laws and policy of the government. The citizenry are like the flame - they have innate, unfaltering properties. It is the role of the government (the person trying to build a big fire) to know these properties of the citizenry, and setup the right conditions so they burn their brightest.
We consume and process things to make other things.
A tree by itself has limited value to a human, but if you process it into a house, it has a lot more value to a human.
Lets say you need 100 trees to make a house. 100 trees is worth $10,000.
A person with the job of chopping trees (a lumberjack) can cut down 300 a year, so they make $30,000 a year in income. Lets say the lumberjack wants to buy a house.
A house is worth $20,000 to him. He pays a firm to build him a house for $20,000. The firm buys 100 trees from someone for $10,000 and then turns them into a house for the lumberjack. That extra $10,000 they received is called "value add". They added value because humans (the employees of the firm) had to turn the wood into a house.
This is what the economy basically is, and you can be in two roles:
1: The resource extractor
2: The resource processor
Or in other words, you can be the wood or the flame.
How to do you make a big fire?
Get more and better resources (like wood and air)
Start fires in more places than one (parallel processing of the wood)
Start hotter fires (blowtorch vs a match)
Pretty much all of the above is controlled by laws and policy of the government. The citizenry are like the flame - they have innate, unfaltering properties. It is the role of the government (the person trying to build a big fire) to know these properties of the citizenry, and setup the right conditions so they burn their brightest.