Intuitively, if a toaster costs 5x in the US what it would cost in China, GDP says that a sale in the US was more productive when in reality it’s the same thing in both places.
My opinion is the money is a means to an end and we’d be served better by focusing on those ends instead: healthcare, housing, education, life expectancy etc.
the utility of a toaster is different in different places.
It may also be the case that a toaster costing 5x in the US, because this is including an opportunity cost for that toaster being made (which means a different thing wasn't made).
The the benefits the new owner of the toaster derives from it.
Maybe toaster is not the best example to illustrate this by, so say we use microwave --and the time saving based off of it-- instead. A 100k/y worker's time savings are 5x the 20k/y workers savings when equal in time.
So the microwave is accepted to cost more. Sellers are great in caching in on this.
I think we have to be careful that by adding “utility” as an indirection we don’t accidentally traffic in “cost”. Because maybe I am dumb but it seems to me that the utility of a toaster is its ability to toast bread.
If I make 5x as much as someone in China and am willing to pay 5x as much for the same thing, at the end of the day we both just want toast. And if I buy a crappy toaster that only costs 2x as much and can only toast half as fast, “utility” (i.e. cost) says my toaster is still better despite it being an objectively worse toaster.
but the seller doesn't care about that. The seller will attempt to extract the maximum price of a toaster.
It is because americans are more productive, that their maximum price for a toaster is 5x that of china; they can afford to pay 5x. So this is a measure of their utility - not the ability to toast. An american finds that the ability to toast to be worth 5x that a chinese would be willing to pay for toast.
If america was poorer, the seller would not be able to sell the toaster for 5x (and instead would have to lower their price to match the price their customers can afford, up to the minimum margin the seller could afford to cut to).
I think my point is about an underlying quality of the toaster, the ability to make toast, which is independent of its cost in different places. The price of a product is complicated by many factors which are irrelevant to that underlying quality.
> an underlying quality of the toaster, the ability to make toast, which is independent of its cost in different places
and this is called intrinsic theory of value[0], which mostly has been superceded by other theories (such as the one in my post, which is the subjective theory of value[1]).
While the intrinsic theory of value isn't wrong per se, it is too naive, and "simple", such that this theory does not explain much when applied to real world scenarios.
My opinion is the money is a means to an end and we’d be served better by focusing on those ends instead: healthcare, housing, education, life expectancy etc.