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Without being able to sell shares, a wine company that makes a profit can only grow by reinvesting their profit. E.g. it cost 100 tokens to set up the shop, it
by verbify 10y ago
Without being able to sell shares, a wine company that makes a profit can only grow by reinvesting their profit. E.g. it cost 100 tokens to set up the shop, it grows by 15 tokens a year, it has to wait 7 years before it can set up a different shop. With the ability to sell shares, once they prove a profitable business model, they can sell shares in order to grow the business into other areas.
Without arbitrage, a wine shop that returns 15 tokens for every 100 invested might be able to sell shares at the same value as a meat shop that only makes 8 tokens for every 100 invested. Even though the wine shop is more popular, more profitable and providing more value to the market, it is forced to grow at the same rate as the meat shop.
We need a system of allocating resources efficiently, and the economy will provide the most value possible. This is what arbitrage does. And you'd want pretty smart people doing it, as these decisions can cause the success or failure of companies.
To put it in other terms, the footsoldiers might do the actual fighting, but I prefer to be part of an army with generals that decide where to place troops rather than one composed entirely out of 'actual fighting people' (or as you call it 'real things produced with real skill and effort, goods such as meat, wine, cars').
There are ways of cheating the system, and I support strong financial regulations. But that doesn't mean these jobs shouldn't exist in the first place or they don't provide any value.
- branchless 10y agoBanking floods fiat ahead of wealth creation to capture labour. These guys didn't create billions in value. They didn't enable it either. They are part of a system that forces us to go to them, pledge our labour for the right to exist. You have the cart before the horse. They also do not allocate resources efficiently. Most bank lending is into land. These guys ride that to steal labour. They do not add this much value, they appropriate it.
- infinite8s 10y agoCan you propose an alternative for capital allocation? Perhaps some magic central planning AI?
- branchless 10y agoLand value tax and state issuance of money via basic income funded by LVT, expansion of said money to be roughly based on projected wealth creation. No income tax. No sales tax or not much of one. Or we could just stick with boom and bust where the banks clean up every time and the west is slowly sinking.
- verbify 10y ago> Land value tax This has nothing to do with allocation of land. If you have a land value tax there'll still be property companies with shares and people who arbitrage them. > state issuance of money via basic income Again, nothing to do with arbitrage. > No income tax. No sales tax or not much of one. Not sure property tax will match income + sales tax, but again, nothing to do with arbitrage. Look, I agree there are people with wealth who don't deserve it. But in my opinion, these are people with inherited wealth. Or the people who got wealth through ill-gotten means. Or the people who avoid taxes. But the people who are in finance? By the time they die they're usually multi-millionaires, not billionaires. And the market as a mechanism is not fundamentally flawed - it just needs careful and judicious regulation.
- branchless 10y agoLand value tax is aimed at suppressing land speculation. I'm not sure why you are contrasting my mentioning LVT to the original topic, as I put that in because the parent poster said, in a very supercilious way: > Can you propose an alternative for capital allocation? Perhaps some magic central planning AI? The system we have is fundamentally flawed.
- infinite8s 10y agoHow do we decide what to build? Or who to give money to to build those things?
- branchless 10y ago