What’s in it for me? Rethink the notion of value in economics.
Are bankers really the most productive people around? Do they create value?
Many think the common-sense answer is a resounding “yes.” We tend to think of people in big business and banking as wealth creators, contributing to the economy as a whole.
But is that actually how it works? Financial services weren’t even included in national accounting until the 1970s. Before that, banks were considered as redistributing value in the economy, but not creating it.
The truth is, our modern conception of economic value is a relatively recent development, and it isn’t fixed in stone. It’s well worth thinking carefully about who creates value in the economy – and also who takes it away.
In these blinks, you’ll learn
- what Adam Smith meant by a free market;
- why accountants pretend that homeowners rent their homes from themselves; and
- the real reason pharmaceutical companies can charge so much for drugs.