4 ms·

I found it telling that this "wealth creator" used entrepreneurs as his example of wealth creators, rather than bankers and traders (he's from a trading/PE/VC

I found it telling that this "wealth creator" used entrepreneurs as his example of wealth creators, rather than bankers and traders (he's from a trading/PE/VC firm).

rbranson 16y ago
Right. He makes many good points, but many of his assumptions are flawed. He uses a few examples and anecdotes to paint a picture of the wealthy exclusively as bootstrapping individuals that innovate for consumers and create massive value. While this is certainly can be case, the reality is that the majority are quite different. Look at the wealthiest individuals and most profitable businesses, they are often not creators of value, but manipulators of markets and mediators of commodities. Energy Companies, Corporate Aggregators, and Financial Services. If we are too blind to see that these companies funnel huge amounts of money away from more efficient uses, perpetuate monopolies, and destroy true free market innovation, then we will pay the price. While his criticisms of Marxism were on the spot, they simply summarize how Marxist ideas of capturing the "means of production" by force are outdated in knowledge economies. Marx was right in the end though: look at the economic success of countries that have converted to knowledge economies, as the workers own their means of production, and often are in the position of being able to demand excellent working conditions and payment in exchange for their labor.
- philwelch 16y ago
  Economic infrastructure and energy are essential services, though. Energy in particular. You'd expect energy companies to be rich, because energy is a necessary part of nearly all the wealth created in any economy (knowledge or industrial).
  - rbranson 16y ago
    I am not saying these industries are not essential and don't deserve the revenues they earn, but the concentration of PROFIT they generate is telling. The margins of players in competitive industries in healthy markets run thin because prices are low and anything left is re-invested into R&D. Just look at the profits Microsoft enjoys -- purely because of their stranglehold on the market, which we'd all agree is bad for the consumer. The concentration of capital and resources that Microsoft retains and mis-manages is staggering. In a true free market, a more efficient, well-managed competitor would have undercut them long ago.
    - kiba 16y ago
      Firefox was killing Microsoft's browser monopoly, without any sort of government intervention, and against enormous inertia. Not all markets are efficient, but some are ripe for the taking by an entrepreneur. Think about all the firms that used windows. If they become less efficient due to using windows, than they will eventually be out-competed by firms that use Linux or MacOS over time, all else being equal.
      - rbranson 16y ago
        Firefox and Internet Explorer aren't products that sell on a market though. There is zero cost to the consumer for using one or the other, so competition is exclusively on features. Open source is sort of post-capitalist in a way. Often markets that suffer from stagnation and seem ripe for the taking by an entrepreneur are that way for a reason: monopoly, government policy favoring large corporations, conditions created by the dominant players, etc. These firms use Windows because of the tremendous cost associated with switching, which is a key strategy of Microsoft. Software is one of the few industries where products are designed specifically to create lock-in scenarios, and it is accepted by the mainstream.
        kiba 16y ago
        These firms use Windows because of the tremendous cost associated with switching It generally does not alway means that new firms will use them. If incumbent are bureaucratic and slow enough to the point of negating the regulations in place, than it might be easier for a linux using firm to enter the market. If the regulations is skewed enough, than firms that used windows may in fact not died at all. Even though I know that the regulations is very skewed, I still like to think that the merit of other operating systems will win out in the long run, even if that long run is a really long time.

I found it telling that this "wealth creator" used entrepreneurs as his example of wealth creators, rather than bankers and traders (he's from a trading/PE/VC firm).

rbranson 16y ago

Right. He makes many good points, but many of his assumptions are flawed. He uses a few examples and anecdotes to paint a picture of the wealthy exclusively as bootstrapping individuals that innovate for consumers and create massive value. While this is certainly can be case, the reality is that the majority are quite different. Look at the wealthiest individuals and most profitable businesses, they are often not creators of value, but manipulators of markets and mediators of commodities. Energy Companies, Corporate Aggregators, and Financial Services. If we are too blind to see that these companies funnel huge amounts of money away from more efficient uses, perpetuate monopolies, and destroy true free market innovation, then we will pay the price. While his criticisms of Marxism were on the spot, they simply summarize how Marxist ideas of capturing the "means of production" by force are outdated in knowledge economies. Marx was right in the end though: look at the economic success of countries that have converted to knowledge economies, as the workers own their means of production, and often are in the position of being able to demand excellent working conditions and payment in exchange for their labor.

philwelch 16y ago
Economic infrastructure and energy are essential services, though. Energy in particular. You'd expect energy companies to be rich, because energy is a necessary part of nearly all the wealth created in any economy (knowledge or industrial).
- rbranson 16y ago
  I am not saying these industries are not essential and don't deserve the revenues they earn, but the concentration of PROFIT they generate is telling. The margins of players in competitive industries in healthy markets run thin because prices are low and anything left is re-invested into R&D. Just look at the profits Microsoft enjoys -- purely because of their stranglehold on the market, which we'd all agree is bad for the consumer. The concentration of capital and resources that Microsoft retains and mis-manages is staggering. In a true free market, a more efficient, well-managed competitor would have undercut them long ago.
  - kiba 16y ago
    Firefox was killing Microsoft's browser monopoly, without any sort of government intervention, and against enormous inertia. Not all markets are efficient, but some are ripe for the taking by an entrepreneur. Think about all the firms that used windows. If they become less efficient due to using windows, than they will eventually be out-competed by firms that use Linux or MacOS over time, all else being equal.
    - rbranson 16y ago
      Firefox and Internet Explorer aren't products that sell on a market though. There is zero cost to the consumer for using one or the other, so competition is exclusively on features. Open source is sort of post-capitalist in a way. Often markets that suffer from stagnation and seem ripe for the taking by an entrepreneur are that way for a reason: monopoly, government policy favoring large corporations, conditions created by the dominant players, etc. These firms use Windows because of the tremendous cost associated with switching, which is a key strategy of Microsoft. Software is one of the few industries where products are designed specifically to create lock-in scenarios, and it is accepted by the mainstream.
      - kiba 16y ago
        These firms use Windows because of the tremendous cost associated with switching It generally does not alway means that new firms will use them. If incumbent are bureaucratic and slow enough to the point of negating the regulations in place, than it might be easier for a linux using firm to enter the market. If the regulations is skewed enough, than firms that used windows may in fact not died at all. Even though I know that the regulations is very skewed, I still like to think that the merit of other operating systems will win out in the long run, even if that long run is a really long time.