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it should be clear from the mounting evidence like this that having (access to) capital is no guarantee of efficient allocation. that's not an indictment of ca
by clairity 7y ago
it should be clear from the mounting evidence like this that having (access to) capital is no guarantee of efficient allocation.
that's not an indictment of capitalism per se but of plutocracy. the greater the wealth concentration, the less efficient we become.
- cryptica 7y agoThis makes sense. Each person has limited bandwidth... If the vast majority of the wealth becomes concentrated in very few hands, those hands will simply start making bigger deals. When you divide an investor's total thinking capacity by the total amount of money they have to invest, you end up with less thought going into each dollar. The average amount of thinking per dollar drops and you get less efficient allocation of each dollar... Allocating capital is clearly very challenging and yet the argument which advocates for increased concentration of wealth relies on the assumption that people are getting better at it on a per-dollar basis. All evidence would suggest that people are getting worse at allocating capital on a per-dollar basis. The more dollars someone has, the less they will care about each individual dollar. An increasingly complex world should require increasingly more thinking going into each dollar.
- clairity 7y agogreat exposition. many get so caught up on the government vs corporate dichotomy when considering excess and waste, but size and scope relative to human capacity is the better correlate.
- perl4ever 7y agoIt seems to me that you're describing the homeostatic feedback loop that prevents wealth concentration beyond a certain point. If the people with all the money were always the best at deploying it for further profit, the concentration of wealth would have no limits. It's because, and when, they screw up, that it stops.