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> Economics is not zero-sum because of production which is what real investment is tied to, and is where the returns come from. Yes. > Speculation is more zer
by dsacco 9y ago
> Economics is not zero-sum because of production which is what real investment is tied to, and is where the returns come from.
Yes.
> Speculation is more zero-sum, but can send useful price signals when tied to an asset that relates to production.
Yes, with the qualifier that the individual trades are what’s zero sum, with the aggregate activity and emergent signals causing the positive sum in real investment.
> However, speculation that is completely disconnected from production is just gambling... zero-sum.
No. Uninformed speculation is less useful for price discovery than informed speculation, but it does not nullify informed speculation. Furthermore, efficient price discovery is facilitated by liquidity, and uninformed speculation is a net improvement in liquidity.
- nwah1 9y agoIn simpler terms, you are saying that there is a huge bounty on guessing what other peoples' guesses are about the future usefulness of a currently useless technology.
- dsacco 9y agoSure. I don’t think that captures all the economic nuance (you’re just reducing it to a Keynesian beauty contest), but yes.
- nwah1 9y agoIt does create incentive for people to try to figure out the usefulness, if any. I agree with that. It also creates lots of other incentives that have no pro-social value. Furthermore, the incentive may be much higher than is actually required, and creates a lot of collateral waste in the process. Every bit of time, energy, and resources spent in this speculative endeavor crowds out other activities. And a large amount of this effort is just spent on a cybersecurity arms race over these hypothetically valuable tokens. I realize you were trying to make a point about speculation in general, such as with futarchy. Any kind of speculation over things related to real production, including bets about CEO performance, would have some obvious informational value. But bets about sports do not.