Where did the other dollar go, Jeff?

Hence the existence of a clearing house in the stockmarket: cross off debt and credit in the whole market. Every one in your story has 100 credit and 100 debt which makes them worth 0. Aligning that in the right way makes a lot of sense :-)

I saw an old PSA, maybe from the 50s or 60s, that had a similar situation (sans prostitute). The twist is, it's a paprr check instead of cash and the guy who wrote the check is broke. There's this whole chain of endorsements as the check is passed around town before it gets back to the guy who wrote it, saving him from the shame of a bounced check.

To recast this in accounting terms, everyone had $100 in accounts receivable and also had $100 in accounts payable.

To anybody who has ever had accounting (and nightmares of t-accounts), this balances to zero.

Makes sense, all the people in town had $100 in debt and $100 in outstanding invoices.

The CEO class is still mostly old enough to remember corporate raiders, and of course we have the modern equivalent where groups buy companies, saddle them with debt, and exfiltrate the money long before the company goes bankrupt.

Having enough liquid assets to prevent a hostile takeover is not the most profitable thing short-term but it does protect you. Amazon is so big it doesn't have that problem. It's simply too big for anyone to get their teeth around.

I think this is another case of "you are not a FAANG, if you act like one it won't turn out the same for you."

It was also compounding the money that would otherwise have to be paid in taxes if it were not reinvested. He is an excellent CEO!

Well, there's number of users and ARPU, or equivalently how much money flowed through ...

I understand telecoms and others get warm fuzzies from that.

Jeff Bezos worked at D.E. Shaw not Renaissance Technologies. Different funds.

I thought it was poorly written and fails to understand some simple financial terms. When people say value is created for shareholders, they don't mean shareholders created that value; they mean that the value of the thing owned by shareholders has increased.

I own shares of a company (I am therefore a shareholder), if the value of that company increases then the value I own as a shareholder increases, hence value was created for me as the shareholder. This is such a basic principle that the author failing to understand this is kind of embarrassing.

There are other basic things the article gets wrong, like saying that bartering doesn't create value which is patently false. Bartering does in and of itself create value by allocating resources to those who wish to consume it. When Alice trades an apple with Bob for a potato, it's usually done because Alice has a need for a potato and doesn't have a need for the apple, and vice versa for Bob, hence the allocation of apples and potatoes goes to where it's most desired. This increases the efficiency of resource allocation which in and of itself creates value. Furthermore the bartering in and of itself causes an incentive to produce more apples and potatoes.

Honestly this is really basic stuff and not worth writing an entire article bickering over semantics.

Sounds like labor theory of value. Not really that great of a theory.

I think it quibbled over standard language that every business uses in it's releases and used Bezos as a whipping post to make a point because it wouldn't have gotten traction otherwise.

Rewriting the question as if the room was supposed to be free also makes the bad math clear:

> Three tourists stop at a hotel, and the manager tells them that a shared room will cost $30. Finding the price agreeable, they pony up $10 each and retire to the room. Later that afternoon, the manager, who is honest, realizes that the room was meant to be priced at $0. The manager orders the bellhop to return the excess $30 to their guests. The bellhop, who is not honest, takes $30 from the register and return only $1 to each tourist, pocketing the remaining $27.

> Now, each of the three tourists has spent $9, for a total of $27. The bellhop has retained $27, which brings the total to $54. Where did the other dollar go?

It clicked for me when I allowed negative balances

  Customers: 0 -30 -30 -27
  Hotel    : 0  30  25  25
  Bellhop  : 0   0   5   2
  Total    : 0   0   0   0

This was my first time seeing said puzzle, and when I got to the end I instantly was thinking? WTF you need to subtract $2 to get to the price of the room, not add to try and get to some imaginary amount of money spent.

The room is $25. Everyone paid $25 for the room + a $2 "tip" to the bellhop.

That said, I'm going to have fun emailing it to my parents. ;)

The puzzle is a lot simpler once you merge the 3 tourists into a single unit since there is no reason to treat them separately. Then it's:

1. A three-headed tourist gives $30 to the hotel.

2. The bellhop takes $5 from the hotel.

3. The bellhop gives $3 to the tourist.

Now it's clear that the tourists are down $27, the hotel is up $25, and the bellhop is up $2.

Shortly after that he does acknowledge that collective labor may be more valuable than individual labor.

However we can all agree that Amazon doesn't create $91B of value when it buys something for $91B in cash. The entire supply chain behind creating the thing Amazon buys, plus the raw inputs, creates something of value that Amazon then consumes.

You could maybe argue that in a market without Amazon, the workers may have been paid only, say, $85B, so Amazon has transferred $6B from consumers to workers. Even then, the value of transferring $6B from consumers to workers is unlikely to be $6B.

If I tighten the last bolt on a car that is worth $20k, I have not created anywhere near $20k in value.

There are colloquial usages of 'value' that make this conversation more complicated. We might describe the value as the utility or desirability of the object -- use value -- where I value food because I can eat it.

Or the exchange value, ie, how many apples is this iron worth.

Or the labor value, ie, how much labor went into producing this item.

Or the price, ie, how much is this item worth in money.

It seems that in reading this sentence, the author is talking about the labor value of the fruits. The various parties may have different ideas about exchange values, prices, and use values, but the labor value doesn't change because the items have exchanged owners.

It makes sense if you believe value to be an objective thing, where each good has a fixed value that is a fact.

In a slightly more complicated model - or the real world - the value of a good or service is informed by things like control and location. Value is not objective, but subjective. Value can be and often is created by moving good from a location where they are values little to a location where they are valued highly.

Including the profit your employer retains -- employers necessarily pay you less than the value of your labor.

How's it nonsense? If I buy $499 dollars at face-value and sell them for $500 there's no possible justification for the claim that I created $500 of value. Perhaps I created $1.

Paying for labor is absolutely as transactional as paying for other inputs to your business. Because you (hopefully) create marginal value on top of that comp doesn't mean the total comp is your value creation.

You can't just add total employee comp to your "value created" pile. There's maybe some marginal value creation you could kind-of claim in that your presence increased employee comp over some hypothetical world where you didn't exist—but that's getting well into bullshit territory, since there's no way to know some competitor you crushed wouldn't have ended up creating more total value and paying their employees even more. It's pure fantasy.

The employer gets value because they make more (in expectation) from the worker than they pay; the worker gets value because they get paid more than the the minimum they'd be willing to work for.

The worker does not get value in that arrangement. The employer is (often but not always) a price maker, the worker is (often but not always) a price taker. This can change depending on whether there are inelasticities of supply or demand.

There is a directly following paragraph about how this exchange is not exactly zero-sum, but so far from being representable by the dollar value changing hands that it doesn't matter for the purposes of identifying the value as $91 billion.

The value the employer gets is double-counted later as part of the profit.

The value to employees is tricky. Without Amazon they might make more from a competitor with less market power. Without the industry, they might make more selling or transporting things directly.