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>misincentives that encourage people to shift value around rather than producing value Isn't that just capitalism? Useless financial operations (shifting value
by andrepd 7y ago
>misincentives that encourage people to shift value around rather than producing value
Isn't that just capitalism? Useless financial operations (shifting value around) are richly rewarded, as opposed to "producing value", which gets scraps as low as the market will bear. You can work your ass off making furniture for 4 decades, you will earn as much as an "investor" does in one week.
- simonh 7y agoBy and large the investor earns rewards because that capital is doing useful work funding productive businesses. Maybe allowing the software business next to your furniture shop to expand, selling services abroad bringing money into the country, or creating a web site you can sell your furniture on. The sorts of financial engineering you're talking about is of course a real thing, but can also add real value by making other useful transactions cheaper. So for example high frequency trading is used heavily by market makers, that provide a useful service creating liquidity in markets. That makes it easier and cheaper to buy and sell equities and such.