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> “That's because the airline industry didn't return profits to investors; instead the vast value created by the industry accrued overwhelmingly to the public,

> “That's because the airline industry didn't return profits to investors; instead the vast value created by the industry accrued overwhelmingly to the public, because of competition.“ rhur? competition is essential to capitalism; monopoly returns to investors are not. no one is even guaranteed a profit. you describe exactly how capitalism is designed to work. this kind of basic misunderstanding is part of why we’re in the mess we’re in. economics and finance should really be required in high school.

AnimalMuppet 8y ago
I think it's a bit much to imply that Warren Buffet missed out on learning economics and finance in high school.
- clairity 8y ago
  might yours be an intentional misreading? buffett surely knows that capitalism's purpose is to allocate capital efficiently in an economy, not generate outsized returns to investors, which is a form of inefficiency: "[E]ventually a fundamental rule of economics prevailed: In an unregulated commodity business, a company must lower its costs to competitive levels or face extinction." -- Warren Buffett, in the 1994 Berkshire Hathaway shareholder letter but he's not an impartial observer--a definitional statement that suits his vested interest is not surprising.
  - dragonwriter 8y ago
    > buffett surely knows that capitalism's purpose is to allocate capital efficiently in an economy No, it's not. That's an retrospective rationalization invented centuries after capitalism came into existence, and even after it was named by its critics. The purpose of capitalism which motivated them pushing the changes which formed it was to secure power previously held by the feudal aristocracy in the hands of the mercantile—what would become “capitalist"—class.
    - clairity 8y ago
      the history is debated, and knowledge is generally retrospective and rationalized. besides, the historical origin of capitalism has little to do with its pragmatic purpose. capitalism wouldn't be a practiced (locally optimal?) economic system were it not relatively efficient at allocating capital in an economy. decentralization of the means of production is also a critical feature of its success, but i'm sure the 18th c. bourgeoisie didn't think about that either.
      - dragonwriter 8y ago
        > capitalism wouldn't be a practiced (locally optimal?) economic system were it not relatively efficient at allocating capital in an economy. Why not? It's certainly reasonable to expect productive efficiency (at least in some sense of output, though not necessarily the pure aggregate utilitarian sense it is normally used) ceteris paribus to lead to better survival of an economic meme, but it seems unwarranted in the extreme to assume that that is the only differentiator in the survival of such memes, which is necesat for the implication you suggest to reliably hold. (And even if it does hold, what does that say about the near-universal evolution away from pure capitalism to various forms of the modern mixed economy?)
        clairity 8y ago
        sure, it's premature to be absolutely sure of the reasons for capitalism's current success (and potential demise), but that doesn't mean we can't draw any conclusions. the underlying conjecture is that capitalism combines with modern political and cultural systems to create broad distribution of esteem and opportunity, while also being more efficient at it, so that attention is drawn toward positive-sum production (and away from zero-/negative-sum conflict), making it more stable than other systems like feudalism. moreover capitalism seems to be flexible enough to combine with diverse political and cultural systems. the modern mixed economy, then, can be thought of as an expression of the pragmatic holistic sociopoliticoeconomic system (vs. the ideal) as it counteracts various forms of self-serving distortions. do you believe maximizing personal capital is a worthy goal in itself, or is there another reason for the debate?

AnimalMuppet 8y ago

I think it's a bit much to imply that Warren Buffet missed out on learning economics and finance in high school.

clairity 8y ago
might yours be an intentional misreading? buffett surely knows that capitalism's purpose is to allocate capital efficiently in an economy, not generate outsized returns to investors, which is a form of inefficiency: "[E]ventually a fundamental rule of economics prevailed: In an unregulated commodity business, a company must lower its costs to competitive levels or face extinction." -- Warren Buffett, in the 1994 Berkshire Hathaway shareholder letter but he's not an impartial observer--a definitional statement that suits his vested interest is not surprising.
- dragonwriter 8y ago
  > buffett surely knows that capitalism's purpose is to allocate capital efficiently in an economy No, it's not. That's an retrospective rationalization invented centuries after capitalism came into existence, and even after it was named by its critics. The purpose of capitalism which motivated them pushing the changes which formed it was to secure power previously held by the feudal aristocracy in the hands of the mercantile—what would become “capitalist"—class.
  - clairity 8y ago
    the history is debated, and knowledge is generally retrospective and rationalized. besides, the historical origin of capitalism has little to do with its pragmatic purpose. capitalism wouldn't be a practiced (locally optimal?) economic system were it not relatively efficient at allocating capital in an economy. decentralization of the means of production is also a critical feature of its success, but i'm sure the 18th c. bourgeoisie didn't think about that either.
    - dragonwriter 8y ago
      > capitalism wouldn't be a practiced (locally optimal?) economic system were it not relatively efficient at allocating capital in an economy. Why not? It's certainly reasonable to expect productive efficiency (at least in some sense of output, though not necessarily the pure aggregate utilitarian sense it is normally used) ceteris paribus to lead to better survival of an economic meme, but it seems unwarranted in the extreme to assume that that is the only differentiator in the survival of such memes, which is necesat for the implication you suggest to reliably hold. (And even if it does hold, what does that say about the near-universal evolution away from pure capitalism to various forms of the modern mixed economy?)
      - clairity 8y ago
        sure, it's premature to be absolutely sure of the reasons for capitalism's current success (and potential demise), but that doesn't mean we can't draw any conclusions. the underlying conjecture is that capitalism combines with modern political and cultural systems to create broad distribution of esteem and opportunity, while also being more efficient at it, so that attention is drawn toward positive-sum production (and away from zero-/negative-sum conflict), making it more stable than other systems like feudalism. moreover capitalism seems to be flexible enough to combine with diverse political and cultural systems. the modern mixed economy, then, can be thought of as an expression of the pragmatic holistic sociopoliticoeconomic system (vs. the ideal) as it counteracts various forms of self-serving distortions. do you believe maximizing personal capital is a worthy goal in itself, or is there another reason for the debate?