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Somewhat tangentially related: I wrote this in a private note to a friend last year. I don't believe this 100%, but the idea is worth exploring in my opinion:

by hliyan 7y ago

Somewhat tangentially related: I wrote this in a private note to a friend last year. I don't believe this 100%, but the idea is worth exploring in my opinion: 1. Corporations desperately pursue continuous growth, even when they're already profitable, and do so at the expense of the environment, employee welfare and sometimes, the rule of law. 2. Corporations pursue growth because investors demand it. 3. Investors demand growth because they want a certain minimum return on investment. 4. Investors need to invest money in instruments with a certain minimum ROI because if they don't, inflation will erode their savings. 5. This continuous growth requirement forces companies to compete for larger and larger portions of market share, which in turn forces their competitors to compete harder in response. 6. The end result is a sort of "Red Queen" effect where everyone is forced to compete harder and harder just to maintain his/her existing standard of living. 7. We know that the more extreme a competition becomes, the more ruthless the participants become, often to the point of acting immorally. 8. Therefore, we should focus on curbing inflation to curb the pace of overwhelming growth, and thereby restore some measure of social justice.

kome 7y ago
you re-discovered or independently discovered the basis marxism, sort of.
- pjc50 7y ago
  I guess you're being downvoted because of the M word, but you have a point; it's very similar to https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit...
  - ezzzzz 7y ago
    Can somebody explain the stigma regarding Marx on HN? I mean, I get that this a forum for a VC firm but isn't it also a place for academic discussion? It's pretty hard to discuss things like income disparity, automation, etc without a mention.
    - TeMPOraL 7y ago
      It's not HN-specific, it's the general culture stigma against Marx bleeding through. And it's not entirely unjustified, because you definitely want to filter out low-effort, thoughtless Marxism.
    - pjc50 7y ago
      HN is okish at academic discussion, despite the constant risk of "middlebrow dismissal" (as the moderation guidelines call it). But people aren't widely read in certain areas outside STEM. The legitimate objections to Marx are that he's old - Marxist analysis is like Freudian analysis, there's a big risk of pretending that nothing has happened in the field for a century. And therefore he's not great on the influences of technology; he pre-dates the microchip and the internal combustion engine. Less seriously, Marxists have a tendency to be annoying jargon-spouters (see Orwell on the subject), and there's a big contingent of fanatical anti-communists who will kick of at the merest mention of his name. In my long list of round-tuit projects is "see what of Marx can be rescued from the Marxists".
      - ezzzzz 7y ago
        Thanks for a thoughtful answer.
- dmix 7y ago
  Identifying problems != providing a better solution. Everyone being equally poor hasn't worked in history yet.
blackflame 7y ago
Ahh you forgot the thing that makes America great: a new invention opens an entire new industry that attracts investors away from current businesses that are stable and not rapidly growing discontinuing the negative spiral you described. Furthermore, companies are not obligated to perpetually take on investors. Perhaps they simply pay a regular dividend instead on the profits they already have like what power utilities do
justincormack 7y ago
We already pretty much curbed inflation. The issue is that people still expect high returns and high interest rates, but these have fallen especially risk free rates, but also maybe returns on risky investments.
seer 7y ago
While that is all true, at least to me it sounds like the old explanation of why Communism failed - "It was indeed superior, but all the world had to agree so for it to work". Say one country develops this utopia where everyone doesn't have to compete to survive, either companies or individuals. Its neighbour though remains with the old Capitalist model. In a generation or two the struggling capitalist country could overtake the utopia one in production, wealth or even by force. Then you're back to square one.
- hliyan 7y ago
  I'm merely suggesting that we maintain the money supply at a level that does not result in any inflation.
  - pjc50 7y ago
    Per other comment: https://news.ycombinator.com/item?id=21664066 https://news.ycombinator.com/item?id=21664066 ; inflation is already near-zero, and this is controlled through interest rates rather than simple M0.
    - hliyan 7y ago
      I do agree with this, but what of pension plans? At 2% inflation, a fund of $10,000 will deplete to slightly over $6000 (inflation adjusted) in 20 years...
      - pjc50 7y ago
        We're back to Picketty and "r > g" here; you're not holding the pension as cash, so you're making a return, so what rate is the return at? And how does the aggregate rate of return compare to the rate of growth in the economy? Or are people seriously proposing having 0 GDP growth and 0% interest rates and 0% expected stockmarket returns? A strange world that's almost certainly unstable. (There is a much broader question that if you expect a dollar to buy you a loaf of bread today, is it really reasonable to expect the same dollar to buy a loaf of bread in 40 years? And what level of stasis would be required to achieve that?)
mlthoughts2018 7y ago
Inflation may occur due to uncontrollable factors, like scarcity of resources as they are consumed at a basic rate. Increasing scarcity means everyone must now compete harder to get the same basic rate of consumption from the reduced resource pool size, regardless of whether corporations or investments or governments even existed at all. Another source of inflation is increasing wage & benefit demands, especially from large middle or lower classes who want to afford to consume more because they value the greater consumption as an important part of life, a noble and intrinsically morally good goal of bettering one’s self through self-determined hard work such that the value of your labor and skill increases over time. In direct response to large classes of workers demanding more pay & benefits, companies will raise their prices to pay for those increases, again totally regardless of whether a stock market exists. I think really inflation is a side-effect of nature, and thinking along the lines of how to long-term control or remove it is counter-productive, compared with accepting that it is inevitable and then trying to come to terms with living in the future world that this implies.
- pjc50 7y ago
  Inflation is a side effect of monetary and fiscal policy; central banks are now quite good at adjusting interest rates to keep inflation in the 0-2% band. > In direct response to large classes of workers demanding more pay & benefits, companies will raise their prices to pay for those increases, again totally regardless of whether a stock market exists. How well this works is down to the "tightness" of the labour market. Central bank policy affects this: raise interest rates -> decrease investment -> increase unemployment above the "NAIRU" ("non-accelerating inflation rate of unemployment") -> workers are unable to demand pay increases as they may be replaced by eager cheaper workers from the pool of unemployed.
  - lonelappde 7y ago
    > quite good at adjusting interest rates and manipulating measurements
  - mlthoughts2018 7y ago
    Even in a barter economy with no government, money system or central fiscal planning there can be inflation. Inflation is nothing more than sustained higher prices for the same amount of goods or service, no matter the cause. Prices could be denominated in fiat money, currency, bartered physical goods, time, whatever. Inflation could be localized to a cafeteria where kids are trading lunch items for the best desserts, or span the globe in ways that transcend any given government’s ability to use fiscal and monetary policy. Inflation caused by Federal Reserve actions is just one (minor) type of inflation.
deleted 7y ago
[deleted]
deergomoo 7y ago
I've long been of the opinion that the public trading of companies is directly responsible for much of the social injustice we see in the West. As soon as there's a fiduciary duty to maximise ROI, morals go out the window. If you as an officer resist, the collective of shareholders will replace you with someone who will make more money. There's a dissolution of responsibility that comes with the distributed nature of shares. The owner of a private company probably feels a certain amount of responsibility for the welfare of their workers. I'd be willing to bet most Amazon shareholders don't. It's probably a naive opinion to hold, and I'm not saying every Amazon shareholder is personally responsible for the warehouse workers that can't use the bathroom without fear of reprisal, but the system is rotten.
- hliyan 7y ago
  I have had the following thought: what if we institute a rule where any shareholder who exercises his right to vote must hold his stock for at least 2 years?
  - heavenlyblue 7y ago
    Can you really vote with public amazon shares?
    - koheripbal 7y ago
      Yes. Shareholder receive voting packets in the mail, or can exercise their votes online at their brokerage website.
      - ryanmercer 7y ago
        But how many of the shares of any major company are owned by funds with other companies doing the voting for thousands or millions of investors? Every single cent I have in the market is via index funds.
  - macspoofing 7y ago
    You can but to fix what problem exactly? There are downsides and unintended consequences for constraining liquidity. It isn't a free lunch, especially given that I'm not sure what the problem is.
coconutrandom 7y ago
#4 is super important once you notice that "investors" includes pension plans.
- ptah 7y ago
  yes, that is a systemic weakness
lonnyk 7y ago
On a quick first read of your list everything strikes me as half true at best. They are all absolute statements, but I don't believe they're true most of the time. 1. I think most corporations are small companies 2. Microsoft didn't grow for almost a decade. Then they tippled in size. Are you suggesting that Microsoft didn't grow for a decade because investors didn't demand it, but were ready to triple in size whenever their investors showed up and demanded it? 3. This is true of any investment and not just true for professional investors. 4. This is true of everyone. 5. Most corporations pursuing continuous growth is a fallacy. The competition you describe is called Capitalism and it has many benefits. Not least of which are lower costs and better products/services for the consumer. 6. I disagree with the premise so I disagree with the conclusion. 7. Capitalism can amplify greed and greed can lead to acting immorally, which is bad, but I maintain this is rare. 8. I've been toying with the idea of the benefits of curving inflation in my mind. You're going to have to define what 'social justice' is and what restoring it looks like.
Scarblac 7y ago
I don't think companies need to grow at a certain rate to get more ROI than the inflation rate. The value of a company expressed in currency should already go up with that currency's inflation rate, even if the company stays exactly the same.
zozbot234 7y ago
Investors demand growth as part of a risk vs. return tradeoff. There's probably quite a bit of "waste" involved in pursuing excessively-risky opportunities that have not shown profitability, simply to obtain a shorter time-to-market than competitors. OTOH the social returns from this activity could still be positive if it means that a broader variety of opportunities is being pursued at any given time.
robin_reala 7y ago
An interesting though experiment would be to investigate what you expect to happen against what happened in Japan, which had basically flat inflation from 1992 to present: http://bilbo.economicoutlook.net/blog/wp-content/uploads/2012/06/Japan_Annual_Inflation_Rate_1971_2011.jpg http://bilbo.economicoutlook.net/blog/wp-content/uploads/201...
pjc50 7y ago
Inflation is already almost zero in much of the West. People demand growth because they want to get richer, regardless of the prevailing conditions. I would also like to point out that if there were to be no growth and no inflation (edit: and a static population level!), then the only way to add a dollar to your pile is to permanently make someone else a dollar poorer. That seems likely to accelerate the lethality of the billionaries vs. hungry poor conflict rather than de-escalate it. > inflation will erode their savings > compete harder and harder just to maintain his/her existing standard of living These are two different things. Savings are a stock, "standard of living" is a flow. The distinction matters here because GDP measures flows; the two are related through the money equation "MV=PQ".
- projektfu 7y ago
  It’s not zero sum, even during recession, because each year the economy is still adding its GDP even if it is not growing. You don’t have to take someone else’s, but you might all take less than the potential.
  - pjc50 7y ago
    > because each year the economy is still adding its GDP even if it is not growing Er .. "economic growth" and "increasing GDP" are usually considered to be synonyms? Do you have alternative definitions?
    - matt4077 7y ago
      I believe they may be referring to the idea that not everything is consumed in the year it’s produced. Infrastructure, for example, is useful years or even decades after it is built (and, presumably, counted in GDP).
      - abdullahkhalids 7y ago
        To make it concrete, if there are two people in the economy: Alice and Bob. The only products that are exchanged is clothes and shoes. Every year, Alice sells 100 Galleons of shoes to Bob and Bob sells 100 Galleons of clothes to Alice. So the GDP of their economy is 200 Galleons. But assuming that shoes and clothes don't decay in one year, Alice and Bob will become wealthier and wealthier in apparel every year.
bg117 7y ago
An alternative would be to forming an co-operative unit that distributes wealth more evenly. More automation only leads to joblessness causing more inequality. Also natural resources are plundered more aggressively by few who become multi-billionaire causing more environmental degradation. Though, greed is necessary for development of society, concentration of wealth to a selected few does not bode well for society. Private profits or shareholder profits are better for society if business model evenly distributes it.
nickik 7y ago
> 1. Corporations desperately pursue continuous growth, even when they're already profitable, and do so at the expense of the environment, employee welfare and sometimes, the rule of law. And sometimes its to the benefit of the environment, the employees and its in accordance with the rule of law. > 4. Investors need to invest money in instruments with a certain minimum ROI because if they don't, inflation will erode their savings. Inflation are low and predictable in the West. And investors would want to make money no matter what the inflation is. > 6. The end result is a sort of "Red Queen" effect where everyone is forced to compete harder and harder just to maintain his/her existing standard of living. That really isn't a logical conclusion. > 8. Therefore, we should focus on curbing inflation to curb the pace of overwhelming growth, and thereby restore some measure of social justice. I would recommend to you to really get into economics. You are making a lot of assumptions that really don't hold up.
- coldtea 7y ago
  >And sometimes its to the benefit of the environment, the employees and its in accordance with the rule of law. Yes. Sometimes lottery is also the right investment: in the 1/10000000 of cases where you win...
  - gpanders 7y ago
    The companies that do exhibit social and environmental responsibility rarely make it into the news, since they don’t support the daily need for outrage or the narrative that Corporations Are Evil. It’s mere selection bias.
    - coldtea 7y ago
      >The companies that do exhibit social and environmental responsibility rarely make it into the news, That's because they're either insignificantly small, or environmental theater (a la Apple).
  - nickik 7y ago
    Do yourself a favor and go down the list of every major industrial process and compare its waste stream and environmental impact, its pretty evident that the majority these process are more efficient and less wasteful. Companies make thins more efficient, and thus they impact the environment less.
Proven 7y ago
I could reply to any of the many plain wrong comments but let's consider this one: > Corporations desperately pursue continuous growth Greedy corporations make more stuff to increase profits although people don't really need or want it. But with all those unsold products and undelivered services, how on earth do greedy corporations make money? Maybe people actually need that stuff or simply want it for $reasons? > The end result is a sort of "Red Queen" effect where everyone is forced to compete harder and harder just to maintain his/her existing standard of living. That isn't true. First, no one is "forced". Only the government can force you to do something even on your own property or on your free time. If you have a problem with that you should be anti-state (or at least anti-tax, so that government doesn't need to collect tax or doesn't have resources to come up with schemas for, and means of, coercion). Second, the value of money is eroded by state-controlled central banks, not greedy corporations. > We know that the more extreme a competition becomes, the more ruthless the participants become, often to the point of acting immorally. If they wrong you, you can sue them (assuming the government doesn't indirectly or directly participate in the scam). Also "immoral" isn't necessarily against the law. Look into the actual violation and if it is illegal, consider why is can go unpunished (say, the silent theft of workers' savings though the expert-recommended 2% inflation rate).
konschubert 7y ago
4. Isn’t true. Even at zero actual growth, you would have nominal growth that matches the inflation rate. Inflation means that the prices of the products that the companies sell increase as well. Inflation doesn’t matter
- gpanders 7y ago
  It absolutely does matter, particularly for owners of debt (bonds). Inflation will eviscerate returns on bonds and all other fixed-income investments.
  - konschubert 7y ago
    Inflation is already priced into bonds. It doesn’t matter as long as it’s more or less predictable.
- deleted 7y ago
  [deleted]
Spooky23 7y ago
Most of these issues are ineffective regulatory systems. Companies that don’t grow are either dying or turning into DMV.
spoovy 7y ago
Without inflation, how would governments shrink their debts? Paying it proves enormously unpopular. Educate people so they understand the importance of running a balanced budget and sound monetary policy. Most politicians have no interest in this though as they believe (probably rightly) that it's too complex or dry for most people, so they just bribe the populace again and again (see UK Labour Party for an current egregious example).
lazyjones 7y ago
Corporations often need to grow just like countries (with their GDP, which normally leads to tax income growth) in order to outgrow their debt. They're also affected by inflation and the resulting increase in costs. Our whole economic system is driven by debts, if we want to stop growth, we should first learn to live with deflation and then see what happens if we make debt-financing investments and expenses/consumption hard or impossible. Logically, this would never work if other countries don't do the same.
dustingetz 7y ago
it’s a lot simpler than that. People need growth. Nobody wants a pay cut, you would be really unhappy and leave because it messes up your plans, you can’t make your mortgage payment, etc. The need for growth is universal at all scales and layers. Wealthy or poor, Society to cellular. BTW check out Macro Voices podcast.
mac01021 7y ago
It's a mistake to assume I'm looking for 0% inflation-adjusted-growth. Assume there is no inflation. If I have invested $625,000 and I want to retire with the ability to spend $25,000 per year on food, housing, medical care, taxes, travel, and insurance, then I require 4% growth (or dividends!) for that to be sustainable.
tekstar 7y ago
I would like to bring another concept to this discussion, which is the cost of externalities. https://en.m.wikipedia.org/wiki/Externality https://en.m.wikipedia.org/wiki/Externality How much corporate growth is directly the result of taking from the environment? Could a regulating body apply the true cost of corporate growth back to the corporations so it were no longer profitable to take from the environment for the sake of your bottom line?
jopsen 7y ago
> 6. The end result is a sort of "Red Queen" effect where everyone is forced to compete harder and harder just to maintain his/her existing standard of living. Nice pocket philosophy, if only the world was a zero sum game, but it's NOT. The past 300 years of growth in human prosperity should make that abundantly clear. Past 30 years the world has reduced extreme poverty by half. Not because we in the developed world got poorer. The only fix we need is to gradually increase taxes on resources until they match the environmental impact. Sure we nee to also regulate the market, etc. To avoid draconian schemes. But a well regulated market with solid incentives can fix many problems.
- tonyedgecombe 7y ago
  That will probably mean some industries would disappear, if they can't innovate their way out of their externalities.
  - jopsen 7y ago
    The same way other inefficient industries disappear when they are outcompeted. We see bank tellers replaced with ATMs because ATMs are cheaper. Humans are adaptable, if done gradually over time it'll probably be fine.
Pfhreak 7y ago
There's a book called Capital, by a guy named Karl Marx which explores this concept fairly deeply. I highly recommend "Reading Capital with David Harvey" which is a lecture series recorded this year that breaks it down and provides modern examples to illustrate the concepts.
SquishyPanda23 7y ago
I think the weak premise is 4. Agents in economics are typically modeled as maximizing wealth or utility, which is different from 4, which says agents want wealth to be non-decreasing.
worldsayshi 7y ago
I think that there is a misconception about cause and effect when it comes to corporate greed. We tend to think that all companies inevitably pursue monetary growth regardless of other costs. If you look at the average corporation that will likely not be true. Big corporations tends to be greedy because that's how they got big. Not so greedy companies either don't grow or they get bought up by more greedy companies. The majority of corporations may not agree with the philosophies of the big ones at all. But the big corporations eat more of the cake. One way to counteract this is to starve the bigger corporations of workforce.
trixie_ 7y ago
Inflation ensures the status quo is never good enough. This drives technological progress to achieve better efficiencies. Good regulations provide the constraints of the game - maintain clear air / water /power etc... What you call social justice in reality would cement the status quo and deincentivize technological progress. See the lack of innovation in socialist countries. Great at copying, bad at inventing.

by hliyan 7y ago

kome 7y ago

you re-discovered or independently discovered the basis marxism, sort of.

pjc50 7y ago
I guess you're being downvoted because of the M word, but you have a point; it's very similar to https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit...
- ezzzzz 7y ago
  Can somebody explain the stigma regarding Marx on HN? I mean, I get that this a forum for a VC firm but isn't it also a place for academic discussion? It's pretty hard to discuss things like income disparity, automation, etc without a mention.
  - TeMPOraL 7y ago
    It's not HN-specific, it's the general culture stigma against Marx bleeding through. And it's not entirely unjustified, because you definitely want to filter out low-effort, thoughtless Marxism.
  - pjc50 7y ago
    HN is okish at academic discussion, despite the constant risk of "middlebrow dismissal" (as the moderation guidelines call it). But people aren't widely read in certain areas outside STEM. The legitimate objections to Marx are that he's old - Marxist analysis is like Freudian analysis, there's a big risk of pretending that nothing has happened in the field for a century. And therefore he's not great on the influences of technology; he pre-dates the microchip and the internal combustion engine. Less seriously, Marxists have a tendency to be annoying jargon-spouters (see Orwell on the subject), and there's a big contingent of fanatical anti-communists who will kick of at the merest mention of his name. In my long list of round-tuit projects is "see what of Marx can be rescued from the Marxists".
    - ezzzzz 7y ago
      Thanks for a thoughtful answer.
dmix 7y ago
Identifying problems != providing a better solution. Everyone being equally poor hasn't worked in history yet.

blackflame 7y ago

Ahh you forgot the thing that makes America great: a new invention opens an entire new industry that attracts investors away from current businesses that are stable and not rapidly growing discontinuing the negative spiral you described. Furthermore, companies are not obligated to perpetually take on investors. Perhaps they simply pay a regular dividend instead on the profits they already have like what power utilities do

justincormack 7y ago

We already pretty much curbed inflation. The issue is that people still expect high returns and high interest rates, but these have fallen especially risk free rates, but also maybe returns on risky investments.

seer 7y ago

While that is all true, at least to me it sounds like the old explanation of why Communism failed - "It was indeed superior, but all the world had to agree so for it to work". Say one country develops this utopia where everyone doesn't have to compete to survive, either companies or individuals. Its neighbour though remains with the old Capitalist model. In a generation or two the struggling capitalist country could overtake the utopia one in production, wealth or even by force. Then you're back to square one.

hliyan 7y ago
I'm merely suggesting that we maintain the money supply at a level that does not result in any inflation.
- pjc50 7y ago
  Per other comment: https://news.ycombinator.com/item?id=21664066 https://news.ycombinator.com/item?id=21664066 ; inflation is already near-zero, and this is controlled through interest rates rather than simple M0.
  - hliyan 7y ago
    I do agree with this, but what of pension plans? At 2% inflation, a fund of $10,000 will deplete to slightly over $6000 (inflation adjusted) in 20 years...
    - pjc50 7y ago
      We're back to Picketty and "r > g" here; you're not holding the pension as cash, so you're making a return, so what rate is the return at? And how does the aggregate rate of return compare to the rate of growth in the economy? Or are people seriously proposing having 0 GDP growth and 0% interest rates and 0% expected stockmarket returns? A strange world that's almost certainly unstable. (There is a much broader question that if you expect a dollar to buy you a loaf of bread today, is it really reasonable to expect the same dollar to buy a loaf of bread in 40 years? And what level of stasis would be required to achieve that?)

mlthoughts2018 7y ago

Inflation may occur due to uncontrollable factors, like scarcity of resources as they are consumed at a basic rate. Increasing scarcity means everyone must now compete harder to get the same basic rate of consumption from the reduced resource pool size, regardless of whether corporations or investments or governments even existed at all. Another source of inflation is increasing wage & benefit demands, especially from large middle or lower classes who want to afford to consume more because they value the greater consumption as an important part of life, a noble and intrinsically morally good goal of bettering one’s self through self-determined hard work such that the value of your labor and skill increases over time. In direct response to large classes of workers demanding more pay & benefits, companies will raise their prices to pay for those increases, again totally regardless of whether a stock market exists. I think really inflation is a side-effect of nature, and thinking along the lines of how to long-term control or remove it is counter-productive, compared with accepting that it is inevitable and then trying to come to terms with living in the future world that this implies.

pjc50 7y ago
Inflation is a side effect of monetary and fiscal policy; central banks are now quite good at adjusting interest rates to keep inflation in the 0-2% band. > In direct response to large classes of workers demanding more pay & benefits, companies will raise their prices to pay for those increases, again totally regardless of whether a stock market exists. How well this works is down to the "tightness" of the labour market. Central bank policy affects this: raise interest rates -> decrease investment -> increase unemployment above the "NAIRU" ("non-accelerating inflation rate of unemployment") -> workers are unable to demand pay increases as they may be replaced by eager cheaper workers from the pool of unemployed.
- lonelappde 7y ago
  > quite good at adjusting interest rates and manipulating measurements
- mlthoughts2018 7y ago
  Even in a barter economy with no government, money system or central fiscal planning there can be inflation. Inflation is nothing more than sustained higher prices for the same amount of goods or service, no matter the cause. Prices could be denominated in fiat money, currency, bartered physical goods, time, whatever. Inflation could be localized to a cafeteria where kids are trading lunch items for the best desserts, or span the globe in ways that transcend any given government’s ability to use fiscal and monetary policy. Inflation caused by Federal Reserve actions is just one (minor) type of inflation.

deleted 7y ago

[deleted]

deergomoo 7y ago

I've long been of the opinion that the public trading of companies is directly responsible for much of the social injustice we see in the West. As soon as there's a fiduciary duty to maximise ROI, morals go out the window. If you as an officer resist, the collective of shareholders will replace you with someone who will make more money. There's a dissolution of responsibility that comes with the distributed nature of shares. The owner of a private company probably feels a certain amount of responsibility for the welfare of their workers. I'd be willing to bet most Amazon shareholders don't. It's probably a naive opinion to hold, and I'm not saying every Amazon shareholder is personally responsible for the warehouse workers that can't use the bathroom without fear of reprisal, but the system is rotten.

hliyan 7y ago
I have had the following thought: what if we institute a rule where any shareholder who exercises his right to vote must hold his stock for at least 2 years?
- heavenlyblue 7y ago
  Can you really vote with public amazon shares?
  - koheripbal 7y ago
    Yes. Shareholder receive voting packets in the mail, or can exercise their votes online at their brokerage website.
    - ryanmercer 7y ago
      But how many of the shares of any major company are owned by funds with other companies doing the voting for thousands or millions of investors? Every single cent I have in the market is via index funds.
- macspoofing 7y ago
  You can but to fix what problem exactly? There are downsides and unintended consequences for constraining liquidity. It isn't a free lunch, especially given that I'm not sure what the problem is.

coconutrandom 7y ago

#4 is super important once you notice that "investors" includes pension plans.

ptah 7y ago
yes, that is a systemic weakness

lonnyk 7y ago

On a quick first read of your list everything strikes me as half true at best. They are all absolute statements, but I don't believe they're true most of the time. 1. I think most corporations are small companies 2. Microsoft didn't grow for almost a decade. Then they tippled in size. Are you suggesting that Microsoft didn't grow for a decade because investors didn't demand it, but were ready to triple in size whenever their investors showed up and demanded it? 3. This is true of any investment and not just true for professional investors. 4. This is true of everyone. 5. Most corporations pursuing continuous growth is a fallacy. The competition you describe is called Capitalism and it has many benefits. Not least of which are lower costs and better products/services for the consumer. 6. I disagree with the premise so I disagree with the conclusion. 7. Capitalism can amplify greed and greed can lead to acting immorally, which is bad, but I maintain this is rare. 8. I've been toying with the idea of the benefits of curving inflation in my mind. You're going to have to define what 'social justice' is and what restoring it looks like.

Scarblac 7y ago

I don't think companies need to grow at a certain rate to get more ROI than the inflation rate. The value of a company expressed in currency should already go up with that currency's inflation rate, even if the company stays exactly the same.

zozbot234 7y ago

Investors demand growth as part of a risk vs. return tradeoff. There's probably quite a bit of "waste" involved in pursuing excessively-risky opportunities that have not shown profitability, simply to obtain a shorter time-to-market than competitors. OTOH the social returns from this activity could still be positive if it means that a broader variety of opportunities is being pursued at any given time.

robin_reala 7y ago

An interesting though experiment would be to investigate what you expect to happen against what happened in Japan, which had basically flat inflation from 1992 to present: http://bilbo.economicoutlook.net/blog/wp-content/uploads/2012/06/Japan_Annual_Inflation_Rate_1971_2011.jpg http://bilbo.economicoutlook.net/blog/wp-content/uploads/201...

pjc50 7y ago

Inflation is already almost zero in much of the West. People demand growth because they want to get richer, regardless of the prevailing conditions. I would also like to point out that if there were to be no growth and no inflation (edit: and a static population level!), then the only way to add a dollar to your pile is to permanently make someone else a dollar poorer. That seems likely to accelerate the lethality of the billionaries vs. hungry poor conflict rather than de-escalate it. > inflation will erode their savings > compete harder and harder just to maintain his/her existing standard of living These are two different things. Savings are a stock, "standard of living" is a flow. The distinction matters here because GDP measures flows; the two are related through the money equation "MV=PQ".

projektfu 7y ago
It’s not zero sum, even during recession, because each year the economy is still adding its GDP even if it is not growing. You don’t have to take someone else’s, but you might all take less than the potential.
- pjc50 7y ago
  > because each year the economy is still adding its GDP even if it is not growing Er .. "economic growth" and "increasing GDP" are usually considered to be synonyms? Do you have alternative definitions?
  - matt4077 7y ago
    I believe they may be referring to the idea that not everything is consumed in the year it’s produced. Infrastructure, for example, is useful years or even decades after it is built (and, presumably, counted in GDP).
    - abdullahkhalids 7y ago
      To make it concrete, if there are two people in the economy: Alice and Bob. The only products that are exchanged is clothes and shoes. Every year, Alice sells 100 Galleons of shoes to Bob and Bob sells 100 Galleons of clothes to Alice. So the GDP of their economy is 200 Galleons. But assuming that shoes and clothes don't decay in one year, Alice and Bob will become wealthier and wealthier in apparel every year.

bg117 7y ago

An alternative would be to forming an co-operative unit that distributes wealth more evenly. More automation only leads to joblessness causing more inequality. Also natural resources are plundered more aggressively by few who become multi-billionaire causing more environmental degradation. Though, greed is necessary for development of society, concentration of wealth to a selected few does not bode well for society. Private profits or shareholder profits are better for society if business model evenly distributes it.

nickik 7y ago

> 1. Corporations desperately pursue continuous growth, even when they're already profitable, and do so at the expense of the environment, employee welfare and sometimes, the rule of law. And sometimes its to the benefit of the environment, the employees and its in accordance with the rule of law. > 4. Investors need to invest money in instruments with a certain minimum ROI because if they don't, inflation will erode their savings. Inflation are low and predictable in the West. And investors would want to make money no matter what the inflation is. > 6. The end result is a sort of "Red Queen" effect where everyone is forced to compete harder and harder just to maintain his/her existing standard of living. That really isn't a logical conclusion. > 8. Therefore, we should focus on curbing inflation to curb the pace of overwhelming growth, and thereby restore some measure of social justice. I would recommend to you to really get into economics. You are making a lot of assumptions that really don't hold up.

coldtea 7y ago
>And sometimes its to the benefit of the environment, the employees and its in accordance with the rule of law. Yes. Sometimes lottery is also the right investment: in the 1/10000000 of cases where you win...
- gpanders 7y ago
  The companies that do exhibit social and environmental responsibility rarely make it into the news, since they don’t support the daily need for outrage or the narrative that Corporations Are Evil. It’s mere selection bias.
  - coldtea 7y ago
    >The companies that do exhibit social and environmental responsibility rarely make it into the news, That's because they're either insignificantly small, or environmental theater (a la Apple).
- nickik 7y ago
  Do yourself a favor and go down the list of every major industrial process and compare its waste stream and environmental impact, its pretty evident that the majority these process are more efficient and less wasteful. Companies make thins more efficient, and thus they impact the environment less.

Proven 7y ago

I could reply to any of the many plain wrong comments but let's consider this one: > Corporations desperately pursue continuous growth Greedy corporations make more stuff to increase profits although people don't really need or want it. But with all those unsold products and undelivered services, how on earth do greedy corporations make money? Maybe people actually need that stuff or simply want it for $reasons? > The end result is a sort of "Red Queen" effect where everyone is forced to compete harder and harder just to maintain his/her existing standard of living. That isn't true. First, no one is "forced". Only the government can force you to do something even on your own property or on your free time. If you have a problem with that you should be anti-state (or at least anti-tax, so that government doesn't need to collect tax or doesn't have resources to come up with schemas for, and means of, coercion). Second, the value of money is eroded by state-controlled central banks, not greedy corporations. > We know that the more extreme a competition becomes, the more ruthless the participants become, often to the point of acting immorally. If they wrong you, you can sue them (assuming the government doesn't indirectly or directly participate in the scam). Also "immoral" isn't necessarily against the law. Look into the actual violation and if it is illegal, consider why is can go unpunished (say, the silent theft of workers' savings though the expert-recommended 2% inflation rate).

konschubert 7y ago

4. Isn’t true. Even at zero actual growth, you would have nominal growth that matches the inflation rate. Inflation means that the prices of the products that the companies sell increase as well. Inflation doesn’t matter

gpanders 7y ago
It absolutely does matter, particularly for owners of debt (bonds). Inflation will eviscerate returns on bonds and all other fixed-income investments.
- konschubert 7y ago
  Inflation is already priced into bonds. It doesn’t matter as long as it’s more or less predictable.
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Spooky23 7y ago

Most of these issues are ineffective regulatory systems. Companies that don’t grow are either dying or turning into DMV.

spoovy 7y ago

Without inflation, how would governments shrink their debts? Paying it proves enormously unpopular. Educate people so they understand the importance of running a balanced budget and sound monetary policy. Most politicians have no interest in this though as they believe (probably rightly) that it's too complex or dry for most people, so they just bribe the populace again and again (see UK Labour Party for an current egregious example).

lazyjones 7y ago

Corporations often need to grow just like countries (with their GDP, which normally leads to tax income growth) in order to outgrow their debt. They're also affected by inflation and the resulting increase in costs. Our whole economic system is driven by debts, if we want to stop growth, we should first learn to live with deflation and then see what happens if we make debt-financing investments and expenses/consumption hard or impossible. Logically, this would never work if other countries don't do the same.

dustingetz 7y ago

it’s a lot simpler than that. People need growth. Nobody wants a pay cut, you would be really unhappy and leave because it messes up your plans, you can’t make your mortgage payment, etc. The need for growth is universal at all scales and layers. Wealthy or poor, Society to cellular. BTW check out Macro Voices podcast.

mac01021 7y ago

It's a mistake to assume I'm looking for 0% inflation-adjusted-growth. Assume there is no inflation. If I have invested $625,000 and I want to retire with the ability to spend $25,000 per year on food, housing, medical care, taxes, travel, and insurance, then I require 4% growth (or dividends!) for that to be sustainable.

tekstar 7y ago

I would like to bring another concept to this discussion, which is the cost of externalities. https://en.m.wikipedia.org/wiki/Externality https://en.m.wikipedia.org/wiki/Externality How much corporate growth is directly the result of taking from the environment? Could a regulating body apply the true cost of corporate growth back to the corporations so it were no longer profitable to take from the environment for the sake of your bottom line?

jopsen 7y ago

> 6. The end result is a sort of "Red Queen" effect where everyone is forced to compete harder and harder just to maintain his/her existing standard of living. Nice pocket philosophy, if only the world was a zero sum game, but it's NOT. The past 300 years of growth in human prosperity should make that abundantly clear. Past 30 years the world has reduced extreme poverty by half. Not because we in the developed world got poorer. The only fix we need is to gradually increase taxes on resources until they match the environmental impact. Sure we nee to also regulate the market, etc. To avoid draconian schemes. But a well regulated market with solid incentives can fix many problems.

tonyedgecombe 7y ago
That will probably mean some industries would disappear, if they can't innovate their way out of their externalities.
- jopsen 7y ago
  The same way other inefficient industries disappear when they are outcompeted. We see bank tellers replaced with ATMs because ATMs are cheaper. Humans are adaptable, if done gradually over time it'll probably be fine.

Pfhreak 7y ago

There's a book called Capital, by a guy named Karl Marx which explores this concept fairly deeply. I highly recommend "Reading Capital with David Harvey" which is a lecture series recorded this year that breaks it down and provides modern examples to illustrate the concepts.

SquishyPanda23 7y ago

I think the weak premise is 4. Agents in economics are typically modeled as maximizing wealth or utility, which is different from 4, which says agents want wealth to be non-decreasing.

worldsayshi 7y ago

I think that there is a misconception about cause and effect when it comes to corporate greed. We tend to think that all companies inevitably pursue monetary growth regardless of other costs. If you look at the average corporation that will likely not be true. Big corporations tends to be greedy because that's how they got big. Not so greedy companies either don't grow or they get bought up by more greedy companies. The majority of corporations may not agree with the philosophies of the big ones at all. But the big corporations eat more of the cake. One way to counteract this is to starve the bigger corporations of workforce.

trixie_ 7y ago

Inflation ensures the status quo is never good enough. This drives technological progress to achieve better efficiencies. Good regulations provide the constraints of the game - maintain clear air / water /power etc... What you call social justice in reality would cement the status quo and deincentivize technological progress. See the lack of innovation in socialist countries. Great at copying, bad at inventing.