# Essay on Value Creation

By Nina Lu · 2022-06-30 · Things That Matter (Medium) · Original: https://medium.com/@ninajlu/things-that-matter-essay-on-value-creation-8268d01faf5e

I want to preface this piece by saying that I don’t have all the answers and I feel like my understanding of the world has profoundly changed over the last 10 years. The more that I dig, the less the world makes sense to me. It’s unfathomably complex and indescribable and the more that I travel and think the less confident I am in things I once thought I knew and understood. At 17, I felt like the world made total sense to me. At 28, the world now makes utterly no sense to me. I hope that the internet will be kind to me (though I know it will not be) and indulge me in sharing my convoluted stream of consciousness so that we may have a fruitful dialogue and figure it all out together.

The first thing I wanted to discuss is value in the world and how to create value in this world.

I think there are 3 levels of types of value you could create in the world by participating in the social order though a career:

1.  Explicitly good but not sustainable
2.  Sustainably good for society with trade-offs
3.  Systems arbitrage with limited value creation for society but secondary value created through consumption

The alternative to these is some sort of active sabotage of human society and progress or abject nihilism, voluntary or unintentional, unaided through mental illness or aided by substances.

![](https://cdn-images-1.medium.com/max/1024/1*MbfsJc2y7sesIBxcF2Fyng.jpeg)

You are star dust. Please don’t fall into nihilism!

_1.Explicitly good but not sustainable_

An example of explicitly good but not sustainable would be roles in philanthropy and non-profits. While these roles often significantly reduce the collective suffering of humanity, they are funded by the good will of benefactors who could decide not to fund these projects in the future. These roles correct vast inequities, often targeting extremely disadvantaged groups, and are focused on helping the most destitute, even if there is no economic model to do so. You will receive less than market rate for these roles so you are paying for the increased personal utility you derive from helping and serving others through foregone income that could go toward higher consumption of goods or services (which hypothetically create utility) for your family or yourself. Thus, for the most part, these roles make the most sense for people for whom the marginal utility of an additional dollar of salary is not very great (people who come from privileged families or have a high earning spouse) or people who derive significant utility from the happiness of serving their fellow man (vis a vis the utility derived from additional monetary or creature comforts). While philanthropy is excellent and laudable, the funding allocated toward philanthropic endeavors falls vastly short of the gap we would need to solve the world’s problems of hunger, malnutrition, and disease. There is almost endless suffering in the world that we could solve. Further, we find that the standard for what we consider acceptable raises with every generation such that what was once accepted and commonplace is considered horrifically inhumane to us today. And even when the standard of living improves, we find that other maladies begin to plague us. For example, the primary concern of earlier humans would have been malnutrition. Now, nutrient dense food is so cheap and widespread in America, the primary problem is the opposite — obesity, heart disease, and diabetes, not starvation. Because of the relativity of happiness and the adaptability of the human mind to whatever situation we are in, improving conditions objectively does not necessarily improve collective happiness. Generally it does of course but I find many people in the US for whom receiving more causes them to want and desire more. If all remote and rural villages were instantly and magically raised to the quality of life in America, would the collective happiness of the world increase? Maybe for a short while, but does it then go back down to the baseline it was before as future generations forget what it was like to suffer against the elements, becoming like modern first-world citizens have become — soft, weak, and ungrateful? I have been to rural villages where the children, playing on rotting harbor remnants on trash-ladened dirt streets, seemed nonetheless happier than grumpy children I’ve seen in the states, to whom all toys in the world are bestowed. Quite simply because they only know the world they have been born into and comparison is truly the thief of joy.

![](https://cdn-images-1.medium.com/max/1024/1*ApJrlLRSKp3GvC4Hu1_SHw.png)

Children on an island, approx. East Nusa Tenggara, Indonesia

It made me wonder whether or not happiness is truly relative and a mindset and a choice to focus on what you are grateful for v. what you lack. Attempts to maximize happiness need to focus on building resilience and equanimity in the face of whatever lot you receive in life as the Stoics or Buddhists landed on millennia before. Having been someone who has been depressed but also immeasurably happy, I know it is really hard to think yourself out of a deep dark hole. Often you do not have the mental clarity or executive function to do so. However, if you find yourself in a state of nihilism, know that it is truly a grand tragedy for the world to be missing out on the magic of your presence. It is the responsibility of people who have made it to the other side to ferry lost souls back through with love and care so that the world does not continue to miss out on the fullest expression of the sad.

_2\. Sustainably good for society with trade-offs_

The line between pure philanthropy and some form of “sustainably good for society with trade-offs” is very blurry now. Occupations in this category take many forms. Some take the form of projects where you sacrifice return-on-investment for some impact angle, a positive externality that you are unable to capture the full economic value of. More common models of these are explicitly “do good” including 1-for-1 models like Toms shoes or Warby Parker to less explicitly good but definitely lower ROI endeavors like sustainable / responsibly sourced coffee or clothing. The ideal would obviously be a project where you are able to do good while not sacrificing ROI or perhaps even increasing your margins. These win-win situations are hard to find but definitely possible. For example, perhaps you are able to use the fact that your coffee is responsibility sourced to charge more for your coffee or increase demand for your coffee such that it becomes a competitive advantage or differentiator that requires you to spend less on marketing than a typical coffee brand. Also the category of “sustainably good for society with trade-offs” encompasses most jobs because this realm also includes working at a company where the company both does potentially good and bad things and whether or not the positives or negatives outweigh each other is a question of values. An illustrative example are gaming companies — on one hand, gaming increases dexterity, hand eye coordination, delights us, and builds community; on the other hand, it could be considered a waste of time and potentially addictive for younger children who arguably should be reading or studying during that time. While I’ve seen the deleterious effects of addictive gaming first hand with my own younger siblings, I do not judge people who go into gaming as a career because for them, gaming could have significant personal value and these positives may outweigh the negatives in their personal value set. Additionally, I ultimately think that people are most productive in society and the most loving and caring friends and family members when they are happy and are doing something that makes their heart sing. If that happens to be working at a gaming studio, who am I to judge that to not be valuable? If it helps them return home to their family and not beat their children and wives and instead as loving and doting fathers, I am delighted that they have found such an occupation. My fear with people moving toward these types of roles is that more people are likely to find careers in endeavors that are instantly gratifying (e.g. gaming, social media) than causes that might have (from my view point) a bigger capacity to improve the objective reality of human kind(e.g. a cure for cancer or alternative / cleaner energy forms). If our society continued to have the best and brightest, for financial reasons or natural inclination, working on better ways to sell or target ads at the expense of other pursuits, would we find ourselves in a stagnating or empty WALL-E like world where we just consume food & content while contributing nothing and furthering nothing.

![](https://cdn-images-1.medium.com/max/1024/0*IWFF9WMbl1WRi_we)

WALL-E world focused on consumption of mindless content and food.

This is not to place a judgment on business models where the primary model is advertising. In fact, the ideal in which people are presented with the perfect product for them when and where they need it would be quite a utopia indeed — imagine never being shown an ad that isn’t relevant to you, or only being shown ads that entertain and delight you for products you would indeed love when you most need them. It would take the inefficiencies out of product discovery and market matching. However, this is an ultimately hedonistic and unsatisfying outcome where humans continue to lust for more and more material possessions and increasingly greater creature comforts to make them feel confident and whole instead of realizing that they already are whole and complete just as they were born.

_3\. Systems arbitrage with limited value creation for society but secondary value created through consumption_

“Systems arbitrage with limited value creation for society” is a challenging one for me to describe. I included this one to encompass jobs that I do not truly believe are adding much value to the world yet nonetheless can result in high monetary compensation. The original premise of money was that at some point it became entirely unwieldy to carry around 10 cows with you to barter with. It was significantly easier to have some representation of a future entitlement to some sort of compensation that was more standard and recognizable and did not require you to lug around giant cows.

![](https://cdn-images-1.medium.com/max/630/0*eNtrWND-eISm7hp2.png)

How about 10 cows for your wheat?

Thus, currency was originally conceptualized as a representation of utility created in the world. However, I find that in the modern world, there are many careers where compensation is wholly out of alignment with utility created for fellow humans. I see this commonly in finance. Not to poo-poo finance since I also once was a finance bro but traders are a great example of this. The issue I have with speculation in the stock market, for example, is that on the opposite of any winning trade is someone losing money. Thus, it is entirely a zero sum game where little value is created in the process and yet can nonetheless yield significant monetary rewards in a short amount of time. Yes, I understand that there is an argument around creating liquidity in markets and don’t dispute that. Ultimately though, I do think there is a big difference between being part of a company that creates something — widgets, software, services — in the world versus one that profits on zero-sum speculation. The latter I would consider to be exploiting arbitrage created in complex systems to great personal gain and very little benefit to society at large. The argument I have heard many people in finance make — and even I made at one point in my life — is the effective altruism argument that you can amass significant wealth and then donate it or allocate it differently that current ruling billionaires. Or maybe you have convinced yourself that you create secondary value in the world through your consumption of the wealth you have accumulated — for example, you stimulate the economy by providing income and jobs to local people through your expensive travels and tourism. I don’t disagree with you and don’t judge you for wanting to provide the best for your family and loved ones. To provide safety and security and a loving and stable home to your children is laudable indeed and to want to save them from the stress of worrying about finances makes sense, especially if you struggled with financial stability in your childhood. What I’m saying is that as a society, value is being misattributed such that our best and brightest are going into zero-sum speculation because the financial outcomes are now disconnected from true utility being created in the world. Ideally, we should have a system that incentivizes the collective brain power of human kind toward work on the challenges that plague us and on technologies that propel us forward. Yes, building models for financial time series prediction could lead us to innovation that helps us in other disciplines just as our endeavors with NASA in space resulted in useful and unexpected ancillary inventions.

![](https://cdn-images-1.medium.com/max/537/0*ZhMuuquhuRwjCnKz.jpg)

Inadvertent NASA inventions

However, if we had applied our brain energy more directly to solving those ancillary problems and deployed our resources, financial and otherwise, toward solving those problems, wouldn’t we have been better off? Ultimately, it is a capital allocation problem. This is one arena in which the government could be extremely impactful and demonstrate the capacity to think more long term about what we as a society might collectively need. Unfortunately, I have lost faith in our system of governance and people in power. Even if individuals go into government idealistic, they are quickly disheartened or corrupted. Having two parents who work for the feds, I have seen the inefficiencies first hand. It feels like the US government is a broken train you can perform maintenance on only by adding more components to, creating an ungainly, slow, and ineffectual vehicle indeed.

Ideally, the government could step in and correct market inefficiencies through effective policies. The hope would be that government could correct adverse market incentives by holding individuals and companies accountable for negative externalities they create to society at large. In this ideal world, the government would also have the forward-thinking lens to invest in large-scale infrastructure projects that would be beneficial but may take a long time to pay back. From an economic policy perspective, increased infrastructure spending is positive as long as (1) the government is able to effectively administer the spending in high ROI projects (if necessary through private-public collaborations) and (2) the infrastructure invested in increases future economic output of its people commensurately. If the second is true, then the government could hypothetically afford to spend indefinitely because as long as GDP is increasing and its people are increasingly productive, tax revenue would also go up sufficiently to cover the cost of servicing the debt borrowed to invest in the infrastructure projects. In this model (barring poor resource allocation, corruption, or failed projects), the limiting factor actually becomes the creativity and ingenuity of the collective brain power of its people and the education / training these people receive. In macroeconomics, in the long-run, economic output of a population is a function of the education attainment / training of the people and rate of idea exchange created by cities, universities, and other human networks but also ultimately also just the size and growth of the population — the number of collective brains working to come up with new ideas.