4 ms·

The parent I think is clearly going down the wrong road. Almost by definition, if you've heard of the person to cite then they have an outsized impact on wealth

The parent I think is clearly going down the wrong road. Almost by definition, if you've heard of the person to cite then they have an outsized impact on wealth circulation. The people to look at are, say, Peter Oppenheimer, former CFO of Apple (picked at random). I'm sure his net worth is in the hundreds of millions and he has a few very nice houses -- but what's the likelihood that a significant portion of his wealth is reintroduced into the economy? I really know nothing about him, so maybe I'm being unfair and he spends lavishly on yachts and mansions, or is an angel investor in 100s of startups, but I think the prototypical Fortune 500 C-level is probably someone who lives very well, but not lavishly and not up to their very generous means. I should also note I'm excluding passive investment in mutual or hedge funds for the sake of argument, but I'm not sure whether they produce sufficient results to count as "reintroducing" money into the market.

yummyfajitas 11y ago
It's highly unlikely that Oppenheimer is sitting on large piles of cash. Most likely his wealth is again in productive assets - e.g. shares of SPY. As an owner of shares of SPY, he then owns small percentages of factories, airplanes, hotels, logistics and similar things. Virtually no one is actually sitting on money because that's a really dumb thing to do. Investing in productive capacity just provides a lot more money.
- Locke1689 11y ago
  I specifically excluded SPY in the last paragraph as a "productive" investment, but only for the sake of argument -- I admit I'm inclined to agree with you that even passive investment of this type is productive. I think the problem pointed out by the original article is that they don't like this because it tends to produce oligopolies (i.e., "chains"). Unfortunately, I think that's just because non-colluding oligopolies are efficient. So the market is "working," some just don't like the outcome.
- jonknee 11y ago
  Buying someone else's shares of a public company isn't super productive. You're buying a stake in future cash flows at companies, not investing in growth. Especially the way buybacks have been going lately,
  - aleh 11y ago
    The cash one exchanges for shares of a public company is usually spent on paying wages, buying equipment, funding R&D etc, thus enabling future growth. If one happens to invest into the inefficient company in a long term it is going to be bust along with investor. How comes this is not productive?
    - jonknee 11y ago
      When you buy a share of SPY you're not paying that cash to all the S&P 500 companies, you're paying it to another party that already has a share of SPY. IPOs give money to companies, but trading shares between parties does nothing for the company and contributes $0 to wages, equipment, R&D, etc. I own shares of SPY, if I sell them to you what exactly changes?
      - refurb 11y ago
        Yes, the cash doesn't go directly from you to the company, but you're creating a market by which a company can raise funds through a stock offering. Take away the market and the company wouldn't get any money.
- Florin_Andrei 11y ago
  You speak as if he's playing any role in that money doing useful work. He's not, he's sipping drinks by the pool, while millions are doing all the actual work. He just happens to have his name written on the paper. That money would do the same work no matter what the name is - or indeed, without any name on the label. That's what differentiates someone doing useful work (e.g. Elon Musk) from all the fancy-drink-sippers no matter what their names are. Beyond a certain limit, ownership is bullshit. It's really stewardship, but it's forgotten its true limits and purpose. When you're touching so many people and resources, you're a steward, not an owner, period. What's lacking now is a mechanism for the bad stewards to undergo corrective action.
  - yummyfajitas 11y ago
    I didn't claim he was playing a role in the management of any company, I merely claimed he wasn't holding money. If you believe Piketty that the wealthy are better investors than the rest of us then the wealthy are actually doing useful work: directing resources towards their most productive use.

yummyfajitas 11y ago

It's highly unlikely that Oppenheimer is sitting on large piles of cash. Most likely his wealth is again in productive assets - e.g. shares of SPY. As an owner of shares of SPY, he then owns small percentages of factories, airplanes, hotels, logistics and similar things. Virtually no one is actually sitting on money because that's a really dumb thing to do. Investing in productive capacity just provides a lot more money.

Locke1689 11y ago
I specifically excluded SPY in the last paragraph as a "productive" investment, but only for the sake of argument -- I admit I'm inclined to agree with you that even passive investment of this type is productive. I think the problem pointed out by the original article is that they don't like this because it tends to produce oligopolies (i.e., "chains"). Unfortunately, I think that's just because non-colluding oligopolies are efficient. So the market is "working," some just don't like the outcome.
jonknee 11y ago
Buying someone else's shares of a public company isn't super productive. You're buying a stake in future cash flows at companies, not investing in growth. Especially the way buybacks have been going lately,
- aleh 11y ago
  The cash one exchanges for shares of a public company is usually spent on paying wages, buying equipment, funding R&D etc, thus enabling future growth. If one happens to invest into the inefficient company in a long term it is going to be bust along with investor. How comes this is not productive?
  - jonknee 11y ago
    When you buy a share of SPY you're not paying that cash to all the S&P 500 companies, you're paying it to another party that already has a share of SPY. IPOs give money to companies, but trading shares between parties does nothing for the company and contributes $0 to wages, equipment, R&D, etc. I own shares of SPY, if I sell them to you what exactly changes?
    - refurb 11y ago
      Yes, the cash doesn't go directly from you to the company, but you're creating a market by which a company can raise funds through a stock offering. Take away the market and the company wouldn't get any money.
Florin_Andrei 11y ago
You speak as if he's playing any role in that money doing useful work. He's not, he's sipping drinks by the pool, while millions are doing all the actual work. He just happens to have his name written on the paper. That money would do the same work no matter what the name is - or indeed, without any name on the label. That's what differentiates someone doing useful work (e.g. Elon Musk) from all the fancy-drink-sippers no matter what their names are. Beyond a certain limit, ownership is bullshit. It's really stewardship, but it's forgotten its true limits and purpose. When you're touching so many people and resources, you're a steward, not an owner, period. What's lacking now is a mechanism for the bad stewards to undergo corrective action.
- yummyfajitas 11y ago
  I didn't claim he was playing a role in the management of any company, I merely claimed he wasn't holding money. If you believe Piketty that the wealthy are better investors than the rest of us then the wealthy are actually doing useful work: directing resources towards their most productive use.