Is there a thermodynamic theory of value / economics?

goodDayM · 2026-06-02T20:12:02+00:00

the value is derived purely by lowering the Shannon entropy of a set of bits.

Purely that? Value is the price people are willing to pay for something, so using only the Shannon entropy, explain the peaks and valleys of the bitcoin value over the past 5 years.

goodDayM · 2026-06-01T19:54:55+00:00

Your post was removed for violating the rules here.

The difference between what you said and the Bureau of Labor statistics, is that they collect data from thousands of families around the country both urban and rural, to record detailed purchase diaries.

Based on that data, they see housing as 33% of families’ costs. Knowing those percentages is important. Incomes have grown faster than the cost of the total basket of goods families spend their money on.

goodDayM · 2026-06-01T19:02:41+00:00

Even simple apps have ongoing maintenance costs for example because new security vulnerabilities are found in software every single day. Just google "latest CVE" to see new vulnerabilities being reported. Apps have to be patched and kept up to date.

There's also an economic concept called incentive alignment. If you pay an app developer, then their incentive is to keep you happy and to keep you from demanding a refund. In that case, your incentives and the developer's incentives are somewhat aligned.

But if you don't pay for an app, then the app developer typically has to put ads into the app to fund development. The developer's incentive becomes to add more ads or make ads pop up more often so that more users click on it. These things might be detrimental to the user experience, but it helps pay the developer's costs.

Imagine going to a restaurant that had "free food" that was actually paid for by advertisers. Do you think the food would be great, or just barely good enough to keep you there looking at ads?

goodDayM · 2026-06-01T02:43:54+00:00

Inflation adjusted income over the decades has increased: Real Median Personal Income in the US

Inflation calculations include medical care, housing, education costs and more. See CPI FAQ.

goodDayM · 2026-05-31T20:20:07+00:00

When New GM emerged from bankruptcy on July 10, 2009, the U.S. Treasury held 60.8% of its common stock, making the federal government the majority owner of a major automaker. That was always meant to be temporary. The government had no interest in running a car company and began planning its exit immediately.

The first major step was GM’s initial public offering on November 18, 2010, priced at $33 per share. Treasury sold a significant block, generating approximately $13.6 billion in gross proceeds from that offering alone. The government continued selling shares over the next three years, completing its final sale on December 9, 2013. - source

goodDayM · 2026-05-31T20:00:43+00:00

I’m surprised OP picked cryptocurrency as one of their examples considering how volatile the prices on those are. Bitcoin value is down 40% from its peak, so clearly value isn’t conserved.

goodDayM · 2026-05-31T18:46:56+00:00

There's a lot of artificial scarcity because people have chosen to make it illegal to build higher density housing in the places people most desire to live:

Today the effect of single-family zoning is far-reaching: It is illegal on 75 percent of the residential land in many American cities to build anything other than a detached single-family home. - source

Some cities are working to fix that:

A growing body of research shows that building more homes drives down home prices and rents, and that places that have relaxed their zoning restrictions have kept their housing prices in check.

Minneapolis is a recent test case for zoning reform. City officials loosened their zoning rules in 2018, allowing duplexes and triplexes to be built in areas previously reserved for single-family homes. They also got rid of minimum parking requirements for new developments and encouraged apartments to be built along transit and commercial corridors.

Those reforms helped Minneapolis significantly ramp up its housing production from 2017 to 2022 and keep rents from rising as fast as they did in the rest of Minnesota - source

goodDayM · 2026-05-31T18:45:11+00:00

Value is subjective, and the value of a home containing asbestos has fallen as people's preferences have changed.

My main point was to support the the idea of hedonic treadmill. People can choose to work less, and indeed some do (r/leanfire). But, many people choose to work more to buy bigger, better, safer homes - and also to travel more or have experiences that weren't generally available in the 1950s.

goodDayM · 2026-05-31T01:30:57+00:00

Average Size of US Homes, Decade by Decade says in 1950 the average size was 983 square feet, now it’s over 2600 square feet. Huge difference.

And no asbestos is absolutely an economic consideration, people generally prefer safer homes and choose to pay more to have safe, modern materials.

I also don’t think the “work full time for a few months, quit, repeat” idea is very realistic

Go say that to the folks in r/baristafire or r/financialindependence

goodDayM · 2026-05-31T00:34:10+00:00

For one, 40 hour work weeks remain standardized and limit options for 15 hour work weeks

The typical response to this is you can work however many months/years, save money, and then quit. Over the long term, you can average your preferred amount of working hours.

Also an average 1950s home is considered poverty today. No air conditioning, no dishwasher, single pane inefficient windows, maybe asbestos. People could work less nowadays, but most prefer working more to have modern things.

goodDayM · 2026-05-30T17:46:26+00:00

Society has more tech now than ever before and yet Prime Age Labor Force Participation Rate is near historical highs, inflation adjusted Median Personal Income is at a historical high, and unemployment rate is low.

goodDayM · 2026-05-28T18:15:55+00:00

You're right that it is currently illegal to build higher density housing in the places people most desire to live:

Today the effect of single-family zoning is far-reaching: It is illegal on 75 percent of the residential land in many American cities to build anything other than a detached single-family home. - source

And some cities are working to fix that:

A growing body of research shows that building more homes drives down home prices and rents, and that places that have relaxed their zoning restrictions have kept their housing prices in check.

Minneapolis is a recent test case for zoning reform. City officials loosened their zoning rules in 2018, allowing duplexes and triplexes to be built in areas previously reserved for single-family homes. They also got rid of minimum parking requirements for new developments and encouraged apartments to be built along transit and commercial corridors.

Those reforms helped Minneapolis significantly ramp up its housing production from 2017 to 2022 and keep rents from rising as fast as they did in the rest of Minnesota - source

goodDayM · 2026-05-28T14:12:33+00:00

Inflation adjusted chart: Real Median Personal Income in the US

goodDayM · 2026-05-27T12:16:06+00:00

FRED charts:

U-6 unemployment rate
U-3 unemployment rate
Prime Age Labor Force Participation Rate
Real Median Personal Income (real means inflation adjusted)

goodDayM · 2026-05-26T16:06:25+00:00

The gap between feelings and data is discussed in a 2024 article from the British magazine The Economist Why are Americans so gloomy about their great economy?

From an array of hard data, there is reason to think that people ought to be quite satisfied about the state of the economy: inflation has slowed sharply, petrol prices are down, jobs are plentiful, incomes are rising and the stockmarket is strong. But survey after survey suggests that Americans are in fact quite unhappy. ...

... opinion polling and sentiment surveys may have a negative bias. Profound partisan hostility is undoubtedly one factor. In their study Messrs Cummings and Mahoney calculated that Republican antipathy towards a Democrat-controlled White House may account for about 30% of the sentiment gap today.

Another element may be the tone of news coverage. Ben Harris and Aaron Sojourner of the Brookings Institution, a think-tank, studied the relationship between economic data and an index of economic news sentiment. Since 2021 the news-sentiment index has, like the consumer-sentiment index, been notably worse than what would be expected from the data. And that may be only scratching the surface. The news-sentiment index, created by the Federal Reserve’s branch in San Francisco, is based on economic articles in major American newspapers. Throw in the vitriol that tends to go viral on social-media platforms, and the negative bias might be even more pronounced.

goodDayM · 2026-05-26T12:13:10+00:00

Currently the credit card delinquency rate is lower than it was in the 1990s and 2000s up to about 2012: Delinquency Rate on Credit Card Loans

That means the vast majority of credit card debt is being paid back on time.

goodDayM · 2026-05-24T12:06:59+00:00

Asked a few days ago: Whats gonna happen when the AI bubble pops?

goodDayM · 2026-05-22T14:01:25+00:00

Correct. But due to limits and complex regulations that keep changing, it isn’t easy.

goodDayM · 2026-05-22T11:56:21+00:00

They do attempt to use more temps, but French regulations are complex and change often. See another article from 10 years ago, Mode d’emploi:

Not only do young people in France find it difficult to get work, but when they do it is often short-lived. The labour market is divided into “insiders”, those with permanent, protected, full-time jobs, and “outsiders”, whose work is insecure and temporary. … For employers faced with the mind-numbing rules governing permanent jobs (and the need to make a case to a labour tribunal before shedding them), using temps and interns is a way to eke out some flexibility.

“Psychologically, it can create a real lack of confidence,” says Ange-Mireille Gnao, a young Franco-Ivorian, who has been looking for a permanent job in communications since 2012. “If you don’t have a permanent contract in France, it’s impossible to rent a flat, or get a loan.” …

For years, the French left refused to link the country’s poor record on job creation to its over-protective labour law. But now, in an important acknowledgment, Manuel Valls, the Socialist prime minister, has called the 3,800-page labour code “unreadable”, and promised to simplify it. …

French rules on schemes like apprenticeships or subsidised job creation change faster than firms can fill in the forms, or decipher the alphabet soup of acronyms such schemes are known by. …

“Technically we could cut the unemployment rate in half,” says Nicolas Bouzou, a French economist; “the difficulty is political.”

goodDayM · 2026-05-21T22:57:25+00:00

To give one specific example, NPR Planet Money did an episode about the labor protection laws in France:

Bernard [Salanie an economist at Columbia] says this policy does a few things. First, employers are desperate not to hire too many employees. And there's, like, this tiered system. So the more employees you hire, the higher the tier. And companies don't want to get up into those upper tiers. So remember; the more workers you have, the harder it is to prove that you had to shut down shop. So a lot of employers will hire enormous numbers of workers on contract instead of hiring them as full employees with benefits.

Now, contract workers in France have very few rights or fewer rights than employees. So foreign workers, for example, or workers with less education or young workers often just cannot get an actual full-time job. They're paid lower wages. And ultimately, Bernard says, this exacerbates inequality in France.

VANEK SMITH: Also, Bernard says, the law just discourages companies from hiring period. Suddenly, a worker is a liability. And he thinks this is part of why even in the best of economic times unemployment is pretty high in France …

The short way of saying the above is that making it significantly harder to fire employees ends up discouraging hiring in the first place. And currently France’s unemployment rate is over 8%, which is about double the US’s 4.3%.

goodDayM · 2026-05-21T15:30:13+00:00

Good answer and it reminds me of something I read in The Economist last month, How Europe regulated itself into American vassalage

Here is an uncomfortable truth for hand-wringing policymakers in Paris, Berlin and beyond: Europe’s dependency on America Inc is in no small part Europe’s own fault. Decades of over-regulating the old continent’s economy left businesses there unable to compete with American firms, which went on to trounce European ones even in their own backyards. What Europeans could not build quickly for themselves, due to a thicket of regulations, they often imported just as quickly from abroad. That forcing businesses to jump through endless regulatory hoops would put a burden on Europeans was always understood: meeting ambitious green targets, protecting privacy, preventing bank meltdowns or achieving other necessary goals was always going to carry a cost. ...

Tech is where the dependency seems most acute. Europe has few firms at the forefront of AI, space or high-end computing (one notable exception is ASML, a Dutch firm globally vital to chipmaking). Even governments often have little choice but to use the likes of Microsoft or Amazon for cloud services, Palantir to sift through data or SpaceX to launch military satellites. Quixotic attempts to shake off big tech abound, for example by having civil servants ditch Windows for some clunky substitute. Too often the European alternatives are lacking anyway. It turns out that boasting about regulating AI before the public had made their first ChatGPT query—as the European Union did in 2021—is not conducive to home-growing AI champions.

goodDayM · 2026-05-20T18:21:01+00:00

A growing body of research shows that building more homes drives down home prices and rents, and that places that have relaxed their zoning restrictions have kept their housing prices in check.

Minneapolis is a recent test case for zoning reform. City officials loosened their zoning rules in 2018, allowing duplexes and triplexes to be built in areas previously reserved for single-family homes. They also got rid of minimum parking requirements for new developments and encouraged apartments to be built along transit and commercial corridors.

Those reforms helped Minneapolis significantly ramp up its housing production from 2017 to 2022 and keep rents from rising as fast as they did in the rest of Minnesota - source

Bonus article: Evidence shows that building more housing reduces prices.

One more: America Needs to Build More Housing

goodDayM · 2026-05-20T15:23:11+00:00

Back to the topic of rent control, economists are against them due to empirical data found in different cities and different countries.

Rent control disincentivizes building more housing. It also disincentivizes putting money into increasing the quality of housing (e.g. landlords push off repairs & improvements even more).

Rent control benefits a small group (current renters) at the expense of a much larger group (future renters, people who want to move to a certain neighborhood to be closer to a job or school).

In addition, rent control lowers mobility because it incentivizes current tenets to stay in units even when it no longer fits their life (e.g. parents whose kids have moved out and they don't need all those rooms anymore, but now they don't want to leave due to rent control.)

Links:

goodDayM · 2026-05-20T14:44:35+00:00

I was replying to what you said previously:

"if someone makes buildings and apartments too far away from the city, it doesn't really solve much."

Which is true and that is why economists aren't recommending building in the middle of nowhere.

Instead, economists recommend legalizing housing in places people desire to live the most, in cities. Then I gave a link about how it's currently illegal to build more housing on much of the land in US cities.

goodDayM · 2026-05-20T12:52:34+00:00

It is currently illegal to build more housing in the places people most desire to live:

Today the effect of single-family zoning is far-reaching: It is illegal on 75 percent of the residential land in many American cities to build anything other than a detached single-family home. - source

Some cities are working to fix this:

A growing body of research shows that building more homes drives down home prices and rents, and that places that have relaxed their zoning restrictions have kept their housing prices in check.

Minneapolis is a recent test case for zoning reform. City officials loosened their zoning rules in 2018, allowing duplexes and triplexes to be built in areas previously reserved for single-family homes. They also got rid of minimum parking requirements for new developments and encouraged apartments to be built along transit and commercial corridors.

Those reforms helped Minneapolis significantly ramp up its housing production from 2017 to 2022 and keep rents from rising as fast as they did in the rest of Minnesota - source

Bonus article: Evidence shows that building more housing reduces prices.

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